Every year people spend hours searching madly for those few missing receipts that will substantiate a tax deduction. An IRS audit is a real fear in the United States, one that is portrayed in television shows as a horrific experience. But did you know that receipts aren’t always a requirement when proving your deductible expenses? Thanks to past Broadway pioneer George M. Cohan, who paid in cash and fought the system when they denied his claims, we have the Cohan Rule. Not the easiest rule to use, you might wind up in court, but good to know in case you ever end up in this situation. Still, probably better to just keep saving your receipts.
Category: Federal Income Tax
Important Tax Extenders And Other Provisions
As the 2015 tax season draws to a close, we wanted to share an article from Maxwell, Locke and Ritter, LLC about the Tax extenders and provisions that have been made permanent by the passing into law of the Protecting Americans From Tax Hikes (PATH) Act of 2015.
Never hurts to know all the ways you are eligible to save on your taxes! If you need more personalized service or have questions, give me a call. Debra Newby Watkins, CPA, 512 484 8016.
Property Taxes Best Practices
Should I pay my property taxes by the end of the year? That all depends…
The general rule is to always take a deduction (pay your property taxes) every year. However, if the total of your itemized deductions is below the standard deduction available to you, “Doubling-up” on your property taxes can afford you a way to keep your standard deduction. Doubling up means paying two years of property taxes at once and then skipping a year.
For example: Suzii is a single taxpayer whose actual property taxes are $6000. She does not donate to charity. As a single person, her standard deduction for 2015 is $6,300. This means, if she has no itemized deductions, she can still reduce her taxable income by $6,300. If she pays her taxes in December, she loses that deduction because her property taxes are less than the standard deduction.
However, if she pays her 2015 taxes in January 2016 and her 2016 taxes by December 2016, her itemized deductions on her 2016 return will exceed the standard deduction and she will get the benefit of an additional reduction of $5,700.
If funds to pay your taxes are held in escrow by your mortgage company, make sure to instruct the company on when they should be paid. Every year check to see if the equity in your property exceeds 20% of the home’s value. Once you reach this mark, the mortgage company can no longer require you to escrow funds and must release any money held in that account to you. You will also by released from making mortgage insurance premium payments.
When purchasing a new home, do not depend on the title company to file your homestead exemption with the appraisal district. Always verify that you are receiving that exemption, as this will affect your property taxes.
As part of the homestead exemption, any 65 year old home owner who lives in the residence, may have their property taxes frozen, If the qualifying homeowner dies, the surviving spouse may continue to receive the exemption if the surviving spouse is age 55 or older at the time of death and lives in and owns the home. This requires an application for the exemption to continue.
There are other exemptions available to disabled persons and veterans, which may also help as you assess the best way to pay your property taxes. For more on these topics visit:
http://comptroller.texas.gov/taxinfo/proptax/exemptions/disabledvet_faq2.html
Keep in mind, that no matter how you choose to finance your property taxes, they are an important part of home ownership and it pays to know all the facts in order to best utilize your money. Have questions? Contact me, Debra Newby Watkins, CPA at 512 484 8016.
A Mind Is a Terrible Thing To Waste
“Only You Can Prevent Forest Fires.”
“Take a Bite Outta Crime.”
Q: Who said these famous lines and from what ad agency did they originate?
A: The Ad Council.
Since its inception, to encourage the public during WWII, the Ad Council has helped develop thousands of public service announcements. The group maintains 35 to 40 active campaigns at one time and receives funding mainly from corporations and individuals, as well as time donated by top ad agencies and media outlets.
Enter the social media generation and the Ad Council is right there, ready to meet this new audience. One of their latest campaigns, “I Am a Witness” focuses on bullying and digital communications. No doubt it will be fascinating to see what new Ad Council slogans become part of our everyday speech.
The Ad Council Adapts to Stay Relevant in an Age of Social Action
A “Sign” of the Times
The open-carry law (Section 30.07, Penal Code) becomes a reality in the state of Texas, beginning January 1, 2016. After that date, anyone with a licensed weapon will be able to carry it visibly in public. Some locations such as schools, hospitals and sporting events are exempt from this law but any other locations wishing to conscientiously object must install a sign with the following details and size requirements:
— Must appear in contrasting colors with block letters at least one inch in height.
— Must be in both English and Spanish.
— Must be displayed in a “conspicuous manner” at the property’s entrance.
— Must say: “Pursuant to Section 30.07, Penal Code (trespass by license holder with an openly carried handgun), a person licensed under Subchapter H, Chapter 411, Government Code (handgun licensing law), may not enter this property with a handgun that is carried openly.”
Is it any wonder that the current battle in Texas is not over the weapons themselves but over the signage required to keep them out of personal places of business and churches? Quite fitting that the penal code section number is, 30.06.
Read more here: ‘No open carry’ signs are likely to trigger next Texas gun debate
When I Say, “End-of-Year Review” How Does That Make You Feel?
Earlier this year I posted an article citing all the issues with employee end-of-year reviews, What if you could replace performance evaluations with four simple questions? In this Forbes spot, The Real Problem Isn’t Annual Employee Reviews – It’s Simply Management, Victor Lipman suggests that end-of-year reviews are actually a good tool as long as there is adequate communication with employees throughout the year. What do you think? Read both articles and see if either change your opinion.
Bonus! Now What?
Bonus! What is the first thought that comes to mind?
Make this additional money work hard for you by following Allison Martin’s eight simple steps. Don’t worry, one is all about spending a little on yourself!
1. Tackle Credit Card Debt
2. Get Caught Up on Past Due Bills
3. Boost Your Emergency Fund
4. Beef Up Your Nest Egg Or Other Investments
5. Establish A College Fund
6. Home Improvements
7. Be Charitable
8. Live A Little
8 Wise Money Moves to Make With Your Bonus
To Camp or Not To Camp?
Every summer, parents face the daunting decision of whether or not to send their children to camp. What kind of camp to choose? Day camp? Sleep-away?
The summer camp experience offers children so many life lessons, such as teamwork, resilience and decision making. Skills that are useful throughout adulthood. Not to mention a week or more break for parents! I will never forget my time spent at Ghost Ranch Vocal Camp. Todd Kestin feels the same way, 5 Ways Summer Camp Helps Your Child Prepare for Adulthood
The “Art” of Investment
This article was especially interesting to me since I have an art gallery space in my accounting office. Of course, none of the works that I have exhibited fall into the category they are talking about, but imagine if you could avoid capital gains taxes all together through re-investment of your earnings from prior art sales. It’s the same principle as real estate purchases and has been growing in popularity recently, to the point where some “traders” are seeing art as a commodity. What do you think? Time to invest in some fine art?
Tax Break Used by Investors in Flipping Art Faces Scrutiny
Time For A “Tax” Break
We are now three days post April 15th, and so I figured we all needed a break from the more serious, tax-related articles. These photographs fascinated me. The grouping entitled Alien Forest is actually of microscopic, forest dwellers who hunt and feed on other microscopic forest dwellers. Hmm, kind of sounds like a microscopic version of the business world. Happy “tax free” weekend. Enjoy the photos by Valeriya Zvereva!