LET’S review a few rules on federal, state, and local taxes: 1. California State Income Taxes in box 24 of your W2 are deductible. So are quarterly estimates paid by self-employed and subcontractor taxpayers. TIP: Time the payment of your estimates in the year with the higher income and higher tax. 2. Real Estate Taxes…

MINIMUM Wage –Minimum wage increases to $9 per hour effective July 1, 2014. Medical and Dental Expense Deduction – Federal law made it tougher to deduct medical expenses by raising the floor from 7.5 percent to 10 percent. This means  that you can only deduct expenses that exceed 10 percent of your federal adjusted gross…

(Part 2 of 2) Immigrants POLL workers: Permanent legal residents who are not citizens may serve as poll workers in California elections. Employer threats: Employers are prohibited from inducing fear by threatening workers to report their immigration status if they complain about working conditions. Lawyers: Illegal residents who pass the state bar exam may be…

(Part 1 of 2) MINIMUM Wage: Minimum wage increases to $9 per hour effective July 1, 2014. Identity Theft, Internet Online Tracking – Identity theft: State agencies and businesses are required to notify people when security information is hacked. – Tracking software: Website operators are required to inform users if their online activities are being…

YES, of course. Direct deposit is the fastest and safest way to receive your tax refund. Here are reasons why you should use direct deposit of your refund: 1. Speed: When you combine direct deposit with e-file, you can receive your refund in as little as 10 to 14 days. 2. Security: The IRS holds…

THE Internal Revenue Service issued an alert about scams relating to Typhoon Haiyan (“Yolanda” in the Philippines). As you may have seen at CNN, Asian Journal, and other media, Haiyan is the strongest typhoon (“hurricane” in the US) in recorded history. It caused thousands of fatalities and rendered millions homeless from high winds and storm…

ALMOST everyone is concerned with saving money on their taxes, but most people worry only about income taxes and ignore planning to avoid estate taxes, which can consume up to 46% of a family’s taxable estate before it can be passed on to the children.  With proper estate tax planning, you could avoid probate and…

WHAT to do immediately -Gather family members. Plan, organize, delegate. Agree on main contact person. -Prepare lists of records to gather, tasks to do, people to contact. Establish responsibilities. -Establish dates & locations of -Viewing -Interment -Reception Who to inform – Family members – Close friends – Employer – Trustee, executor – Pastor, minister, priest,…

S CORPORATION is a corporation that has elected to be taxed under Subchapter S of the Internal Revenue Code. This type of entity enjoys both the limited liability of corporations and absence of double taxation of sole proprietorships and partnerships.  The corporation elects to be pay zero corporate federal tax and to pay a super-low…

TOUGH times may necessitate dipping into your retirement funds before retirement. Look at the tax impact of such a move. You may be shocked to find out what you are left with – as little as half or two-thirds of what you withdraw. Here are ten facts about early distributions. 1. Payments you receive from…

THE Internal Revenue Service issued an alert about scams relating to Typhoon Haiyan (Yolanda in the Philippines). As you may have seen at CNN, Asian Journal, and other media, Haiyan is the strongest typhoon (hurricane in the US) in recorded history. It caused thousands of fatalities and rendered millions homeless from high winds and storm…

IN A landmark case, the Supreme Court has held that a conviction for willfully filing a false tax return is a deportable offense under our immigration laws. It reached the same conclusion with respect to a conviction for aiding and assisting in the preparation of a false return. Background – Tax evasion is a felony…

1. IRS wants you to keep good records to document your income and support your expenses. It does not require you to keep records in any specific manner, but there are proven ways to keep good files. Read on. 2. There are two basic types of filers: the rat pack that hoards files for the…

WHEN buying and selling real estate, there is always that inevitable question: how do you hold title? Remember that your choice can have dramatic impact on estate taxes, liability protection, heirs, family situations and other factors. Let’s explore choices to help you determine which title is best for your next property. Joint tenancy -Any number…

OUR column usually focuses on serious (and sometimes boring) subjects of tax and finance. Let’s depart from that dull setting and explore the lighter world of Murphy’s Law: 1. If something can go wrong, it will. At the worst possible time. 2. Friends come and go, but enemies accumulate. 3. Brain cells come and brain…

1. File Electronically – Consider filing electronically instead of using paper tax forms. If you file electronically and choose direct deposit, you will receive your refund faster. 2. Check social security numbers – Make sure that SS numbers are correct for you, your spouse, and children. If you e-file, names used for your returns must…

1. YOU may claim exemptions for yourself, your spouse and your dependents. 2. Dependents must have a Social Security number (TIN is not good enough). 3. Exemption amount is $3,800 for 2012 for each exemption. 4. Exemptions reduce your taxable income and your income tax. 5. It could also produce credits such as child care…

How long do you have to keep tax records? How long can the IRS audit your tax returns? Let’s discuss 10 tips on statute of limitations so you can clean your garage this weekend. Statute of limitations provides final dates after which neither you nor the IRS can be disturbed by the other. ? From…

IF you paid someone to care for your child, spouse, or dependent, you may be able to claim the Child and Dependent Care Credit on your federal income tax return. Here are 10 tips on claiming a credit for child and dependent care expenses. -The expense for child and dependent care must be provided for…

SOME business establishments pay cash wages “under the table.” Why?  Is it worth it? What are the risks? What does paying cash wages ‘under the table’ mean?  This common phrase means the payment of wages to employees by cash. It also includes payments of wages by checks that are disguised to look like other types…

THE Treasury Inspector General for Tax Administration (TIGTA, an agency that oversees the IRS) instructed the IRS to expand audits to prior and subsequent years. This means that if IRS audits your income tax return for 2011, they must expand the audit to your 2010 and 2012 as well. Ouch! The Treasury Department conducted its…

LET’S discuss reasons why you should consider filing, even you are not required to: 1. You expect a refund. You have credits that can generate a refund – from taxes withheld from your paycheck, estimated tax payments, or a prior-year overpayments applied to this year. 2. You may qualify for Earned Income Tax Credit (EITC)…

IF your mortgage loan is forgiven, you end up with income from cancellation of debt. Here are 10 tips to exclude the forgiven debt from your income. • Cancellation of debt (COD) or debt forgiveness results in taxable income; however, you may be able to exclude the income (meaning you don’t have to pay tax…

A short sale occurs when you sell your property for a price that is short of the balance owed to avoid a foreclosure – with the consent of your lender. Let’s define recourse and non-recourse loans and discuss variations when the property is outside California or if you move into or out of California. Here…

THE IRS is back. In full force. Leaner. Stronger. After reeling from congressional hearings and keeping a low profile for many years, the IRS reorganized and is back. Their mission then was to protect taxpayers. The mission now: go raise revenues. It is time to prepare for audits again. Let’s learn how agents evaluate evidence…

(Part 2 of 2) The Internal Revenue Service (IRS) announced a major expansion of its “Fresh Start” initiative to help struggling taxpayers by providing: Offer in Compromise (OIC) – more flexible guidelines for collection potential. Payment plans – more taxpayers can apply without financial statements. We discussed OIC in a prior article. Let’s now discuss…

THE IRS issued new guidance requiring individuals with an interest in a “specified foreign financial asset” to attach a disclosure statement to their income tax return for any year in which the aggregate value of all such assets exceeds $50,000. Use new form Form 8938 (Statement of Specified Foreign Financial Assets) starting in 2011. Q….

NEW Foreign bank account rules were designed to combat money laundering, terrorism, and tax evasion. Unfortunately, folks like you and me get snared in the process. We get penalized if we don’t follow the new rules. I have written a series of simplified articles on this subject to help you understand the new rules and…

YES. Some are. Let’s discuss taxes, penalties, and interest that are not dischargeable in a Chapter 13 filing. The Chief Counsel of the IRS examined which tax claims are nondischargeable in Chapter 13 bankruptcy cases filed on or after Oct. 17, 2005 (the effective date of the Bankruptcy Abuse Prevention and Consumer Protection Act of…

Background WHEN is your return free from IRS audits? From your perspective, statutes of limitation prevent the IRS from collecting a deficiency in tax or beginning a civil or criminal case. In short, statutes of limitation provide a date of finality after which the IRS or the taxpayer can take no further actions. We all…