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Animal lovers win court case

RRWeb — Sun, 25 Sep 2011 13:42:35 +0000

If you provide care for stray or feral animals in your home for an IRS—approved charity, you may be able to take a tax deduction for your out—of—pocket expenses.

A recent U.S. Tax Court judge ruled that a taxpayer who fostered feral and stray cats in her home could deduct amounts she spent for food, veterinarian bills, litter, and other unreimbursed expenses incurred to help the charity in its mission.

An important requirement for such expenses to be deductible: the taxpayer must keep records of the expenses, and if they exceed $250, the charity must provide a contemporaneous written acknowledgment of the expenses as a charitable donation.

The Humane Society hopes to get the word out on this case, stating that thousands of members do volunteer work such as this and spend their own money to support the mission of local animal shelters and rescue groups.

Questions?

Do you have questions about tax deductions for approved charities? Please contact us or call: 650-344-6525

ENGELMAN ACCOUNTANCY CORPORATION

520 So. El Camino Real, Suite 410

San Mateo, CA 94402

“Tax Freedom Day” came later in 2011

RRWeb — Wed, 01 Jun 2011 13:46:00 +0000

“Tax Freedom Day” fell on April 12 in 2011, three days later than in 2010. According to the Tax Foundation, all the money earned by taxpayers in the first 102 days of 2011 will go to pay their federal, state, and local taxes.

Another statistic from the Tax Foundation: If the government were to collect enough taxes to fund all spending for 2011 (with no deficit), Tax Freedom Day would be May 23, 2011. That’s 41 more days of work to provide the additional $1.48 trillion of revenue needed.

Questions:

Please contact us or call: 650.344.6525

ENGELMAN ACCOUNTANCY CORPORATION
520 So. El Camino Real, Suite 410
San Mateo, CA 94402

More options for tax refunds this year

RRWeb — Sat, 05 Mar 2011 22:41:29 +0000

Last year, you could use your tax refund to purchase U.S. Series I Savings Bonds in your name. This year, there are some new options for purchasing savings bonds with your income tax refund.

You can buy savings bonds for yourself and up to two other individuals. Form 8888 is used to designate the person or persons in whose name the bonds are to be issued. The savings bonds will then be mailed to those individuals. Up to $5,000 in bonds can be purchased in $50 increments. Also new this year: You may request a paper check for the balance of your refund if you prefer that to direct deposit.

Questions:

Do you have questions about new options for tax refunds this year?
Call the tax experts at:

ENGELMAN ACCOUNTANCY CORPORATION
520 So. El Camino Real, Suite 410
San Mateo, CA 94402
650.344.6525

How does the new financial overhaul law affect you?

RRWeb — Mon, 20 Dec 2010 23:48:04 +0000

So what’s all the fuss over the new financial reform law? The headline-grabbing law raised quite a furor on Wall Street, but what does it mean for you and me? Here is how the law will affect ordinary folk.

The biggest change associated with the new law is the creation of a new federal agency, the Consumer Financial Protection Bureau. The mandate of the Bureau is to create and enforce regulations that will protect consumers of financial products much as the government now regulates safe practices for products such as vehicles and food. Areas of enforcement will include credit and debit cards, mortgages, and student loans.

Financial institutions will be required to clearly state the terms of consumer loans and follow strict guidelines designed to ensure that borrowers get a loan they can afford. Deceptive practices, such as hidden interest rate increases, will be illegal. Surprisingly, one important consumer financial product was left untouched. Car loans will not be regulated by the new agency, so “buyer beware” continues when borrowing for a car.

How you use your credit or debit card might also change. Bank overdraft fees will no longer be automatically assessed on debit card transactions. Instead, banks are required to give their customers a choice of accepting overdraft protection – along with the fee charged when overdrawn – or to allow their debit card to be rejected by the retailer when there are insufficient funds in the buyer’s account.

Also, the fee that credit card companies charge retailers to process customer charges will be limited by the Federal Reserve, which might trickle down to savings for consumers on their purchases. On the flip side, retailers have the option to require a minimum debit card charge of up to ten dollars, and using a credit card to pay college expenses may have limits.

Many of the changes in the law are directed to banks’ financial health, hopefully making your bank stronger and safer. The FDIC insurance limit has now been permanently increased to $250,000. Financial institutions must restrict their investment in hedge funds and private equity products. And banks will have to increase their capital reserves, with no institution allowed to become so large that it represents more than 10% of the banking market.

Many of the law’s practical implications have yet to be worked out. So stay tuned for more changes to come.

Do you have questions about the new financial overhaul law and how it affects you? Contact us today:

ENGELMAN ACCOUNTANCY CORPORATION
520 So. El Camino Real, Suite 410
San Mateo, CA 94402
650.344.6525

Harvest some losses to lower your 2010 taxes

RRWeb — Wed, 15 Dec 2010 23:36:14 +0000

Consider the following strategy between now and the end of the year to restructure your investment portfolio in a tax-efficient manner.

Taxpayers are allowed to offset capital gains (such as from the sale of stocks) with capital losses. If capital losses exceed capital gains for the year, up to $3,000 of losses can be deducted from other income, such as wages. Any loss greater than that can be carried forward to future years. It’s important to remember that stocks you’ve owned for more than one year (called long-term) must be grouped together for purposes of calculating the capital gain or loss. The same is true for stocks held for one year or less (short-term).

Here’s the strategy. When you identify stocks in your portfolio that have lost value and are no longer worth holding, consider selling those securities and offset all but $3,000 of the loss by also selling stocks that have gained value. This is known as “tax loss harvesting,” and it can be an effective method for rebalancing your portfolio without paying capital gains taxes.

You can often manage the size of your gain or loss when you decide to sell some, but not all, of a particular stock or mutual fund. To do this, you must have kept good records of the date and the price for each share purchase. By selling the highest cost shares first, you’ll minimize your taxable gain or maximize your loss. You must specify the particular shares you are selling at the time you sell.

Do you have questions about restructuring your investment portfolio in a tax-efficient manner? Contact us today:

ENGELMAN ACCOUNTANCY CORPORATION
520 So. El Camino Real, Suite 410
San Mateo, CA 94402
650.344.6525
www.engelmanaccountancy.com

W-2 reporting of health costs optional for 2011

RRWeb — Thu, 09 Dec 2010 23:20:58 +0000

The IRS and the Treasury are giving employers additional time to adjust payroll systems and procedures to meet the requirement to include the cost of employer-sponsored health coverage on employees’ W-2 forms. This reporting requirement was mandated in the 2010 health care reform legislation and was scheduled to take effect with the issuance of W-2 forms for 2011.

Reporting the cost of coverage will be optional for Forms W-2 issued for 2011. Employers who fail to report the cost of health coverage for their employees will not be subject to penalties. The IRS notice included a reminder that the reporting requirement is for informational purposes only. The amount reported on an employee’s W-2 is not taxable income to the employee.

Please contact us today if you have questions about W-2 reporting requirements:

ENGELMAN ACCOUNTANCY CORPORATION
520 So. El Camino Real, Suite 410
San Mateo, CA 94402
650.344.6525 FAX 650.344.6369
www.engelmanaccountancy.com

Homebuyer tax credit is extended

RRWeb — Sat, 31 Jul 2010 12:30:25 +0000

If you signed a contract before May 1 to buy a home, but have been unable to close the deal, you still have time to apply for the homebuyer tax credit. The deadline for finalizing the paperwork on your new home has been extended through September 30, 2010. Here’s what you need to know:

The extension applies only if you already had a contract in place by April 30, 2010. The new deadline is available for first-time homebuyers and long-time residents.
The maximum credit remains unchanged ($8,000 for first-time homebuyers and $6,500 for long-time residents), as do other rules for qualifying.
You can claim the credit on your 2009 or 2010 federal income tax return. You’ll have to complete Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, and attach proof that you meet the requirements.

Not sure if you qualify? We can help. Please call for more information.

ENGELMAN ACCOUNTANCY CORPORATION
520 So. El Camino Real, Suite 410
San Mateo, CA 94402
650.344.6525 FAX 650.344.6369
www.engelmanaccountancy.com

Getting married changes your tax situation

Engelman Accountancy — Wed, 26 May 2010 12:01:05 +0000

If wedding bells are in your future, your tax situation will be changing also. For starters, your tax filing status will change. You will have the choice of filing a joint return with your spouse or filing a separate return as a married person.

Filing a joint return usually gives you the bigger tax savings. Both spouses’ income and deductions for the entire year will be combined onto one return. Any deductions that are subject to limitations will be determined based on the combined income of both spouses.

In some cases, filing a separate return may save you taxes. A spouse who has high medical expenses or miscellaneous itemized deductions and low income, for example, might be better off filing a separate return. However, you may not claim certain credits and deductions if you file separate returns. Generally, only if you file a joint return can you claim the child and dependent care credit, the earned income credit, or education credits. Filing separate returns could affect the taxability of your social security benefits and the deductibility of rental losses.

The tax law has been changed to eliminate some of the additional tax that married couples once paid (called the “marriage penalty”). However, once you marry, you should review your federal income tax withholding at work. Fill out a new Form W-4 and indicate that you are married.

Several other limitations may come into play once you get married. For example, your IRA contribution may not be deductible if your spouse is covered by a retirement plan at work and your income exceeds certain limits.

Newlyweds can be faced with a surprise tax bill on April 15 unless they do advance planning. For details or planning guidance, give us a call.

ENGELMAN ACCOUNTANCY CORPORATION
520 So. El Camino Real, Suite 410
San Mateo, CA 94402
650.344.6525 FAX 650.344.6369
www.engelmanaccountancy.com

New credit card protections go into effect

RRWeb — Tue, 30 Mar 2010 18:51:24 +0000

The Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (CARD), designed to protect consumers from unfair credit practices, generally took effect on February 22, 2010. Here is a summary of several key provisions.

Introductory rates offered by credit card companies must remain in effect for at least one year (six months for promotional offers). Consumers must receive at least 45 days’ notice (instead of the previous 15 days) before a rate hike. (This provision became effective August 20, 2009.)

Companies will be required to mail credit card statements at least 21 days before the due date (seven days longer than before).

Issuers can’t raise rates on an existing balance unless you’re late by 60 days or more.

Credit card payments will be applied to debt with the highest interest first. Previously, companies did the opposite.

Double-billing cycles, the practice of basing finance charges on both the current and previous balance, are banned.

To reduce “over-the-limit” fees, companies must obtain a cardholder’s permission to process transactions above their personal limit.

Consumers must be notified how long it will take and how much it will cost to eliminate debt through minimum monthly payments.

Applicants under age 21 won’t qualify for a credit card without showing an ability to pay or a co-signer.

Statements must prominently display fees paid to-date as well as explanations for those fees.

ENGELMAN ACCOUNTANCY CORPORATION

520 So. El Camino Real, Suite 410

San Mateo, CA 94402

650.344.6525 FAX 650.344.6369

www.engelmanaccountancy.com

Tax changes for 2010

RRWeb — Mon, 15 Mar 2010 18:07:59 +0000

There are significant changes in the tax rules this year, with the promise of much more to come.

The following are some of the 2010 changes that could affect you.

Deductions. The 2001 tax law gradually restored the full deduction for personal exemptions and itemized deductions for higher-income taxpayers. Effective this year, high-income taxpayers are entitled to the full $3,650 deduction for each personal exemption they take, and there will be no income-based reduction in their total itemized deductions. As with most other provisions in the 2001 tax law, this change ends after December 31, 2010, and itemized deductions and personal exemptions will again be limited for highincomers in 2011.

RMDs. For 2010, annual minimum distributions from most retirement plans are once again required for those aged 70½ and older. In 2009, these required minimum distributions (RMDs) were suspended. 2010 distributions must be taken by December 31, 2010. Taxpayers who turn 70½ in 2010 may choose to delay taking their first distribution until April 1, 2011.

Roth conversions. Prior to this year, taxpayers with adjusted gross income over $100,000 were not allowed to convert a traditional IRA to a Roth IRA. A provision from a 2006 law went into effect January 1, 2010, repealing the income limit for Roth conversions. Roth IRAs have two major benefits over the traditional IRA. Qualifying distributions are tax-free, and no annual distributions are required once you reach age 70½. The major drawback to converting a traditional IRA to a Roth IRA is the fact that the conversion is taxable. But if you convert in 2010, you can elect to report half of the income on your 2011 tax return and half on your 2012 tax return.

Do you have questions about the 2010 tax changes? Call us today for the answers.

ENGELMAN ACCOUNTANCY CORPORATION

520 So. El Camino Real, Suite 410

San Mateo, CA 94402

650.344.6525 FAX 650.344.6369