Helpful Tax Tips if You’re Moving this Summer

If you make a work-related move this summer, you may be able to deduct the costs of the move. This may apply if you move to start a new job or to work at the same job in a new job location. The IRS offers the following tips on moving expenses you may be able to deduct on your tax return.

In order to deduct moving expenses, you must meet these three requirements:

1. Your move closely relates to the start of work. Generally, you can consider moving expenses within one year of the date you first report to work at a new job location. Additional rules apply to this requirement.

2. You meet the distance test.  Your new main job location must be at least 50 miles farther from your former home than your previous main job location was. For example, if your old main job location was three miles from your former home, your new main job location must be at least 53 miles from that former home.

3. You meet the time test.  After you move, you must work full time at your new job location for at least 39 weeks during the first year. Self-employed individuals must meet this test and also work full time for a total of at least 78 weeks during the first 24 months upon arriving in the general area of their new job location. If your income tax return is due before you have satisfied this requirement, you can still deduct your allowable moving expenses if you expect to meet the time test.

See Publication 521, Moving Expenses, for more information about these rules. If you can claim this deduction, here are a few more tips from the IRS:

• Travel.  You can deduct transportation and lodging expenses for yourself and household members while moving from your former home to your new home. You cannot deduct the cost of meals during the travel.
• Household goods.  You can deduct the cost of packing, crating and transporting your household goods and personal property. You may be able to include the cost of storing and insuring these items while in transit.
• Utilities.  You can deduct the costs of connecting or disconnecting utilities.
• Nondeductible expenses.  You cannot deduct as moving expenses any part of the purchase price of your new home, the costs of buying or selling a home, or the cost of entering into or breaking a lease. See Publication 521 for a complete list.
• Reimbursed expenses.  If your employer reimburses you for the costs of a move for which you took a deduction, you may have to include the reimbursement as income on your tax return.
• Update your address.  When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive mail from the IRS. File Form 8822, Change of Address, to notify the IRS.
• Tax form to file.  To figure the amount of your deduction for moving expenses, use Form 3903, Moving Expenses. 

Get more details about this topic in Publication 521 and Form 3903. Both are available at IRS.gov or by calling 800-829-3676.

Additional IRS Resources:

• Publication 521, Moving Expenses
• Form 8822, Change of Address
• Form 3903, Moving Expenses
• Can I Deduct My Moving Expenses? – Interactive Tax Assistant tool
• Tax Topic 455 – Moving Expenses

IRS YouTube Videos:

• Moving Expenses – English | Spanish | ASL

IRS Podcasts:

• Moving Expenses – English | Spanish

2012 Tax Return Extensions Due

2012 Tax Return Extensions are due in 5 days.  Make sure you file your tax return on time to avoid penalties and interests.  Thank you

Have You Hugged Your CPA Today?

 

In This Issue...  [#0]Have You Hugged Your CPA Today?  [#912600_recap]More Recent Articles  Search AICPA Insights

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More than sixty-five million Americans are serving as volunteer caregivers for vulnerable loved ones – and as baby-boomers step into senior status, that number will rise. Caregiving for someone with a disability, lengthy illness or aging issues is challenging enough, but adding money concerns to the mix can create a massive strain on individuals and families. Caregivers find themselves thrust into roles they are poorly suited to maintain. Juggling medical, relationship and job-related matters can often pale in the face of the financial pressures of caring for someone who is chronically ill or disabled.  The key is sustainability – and in order to manage the massive bills, extra costs and nuances of the tax code, I have found that I require the help of a trained professional, specifically a CPA. I look at a CPA almost like a primary care doctor. A CPA functions as the “hub” of the financial wheel of life. From mortgages to tax deductions, a CPA can serve as a guide through the financial jungle of both individual budgets and our national economy. Between work and full-time duties as a caregiver, how can I possibly have the time to keep up with all the changes in the tax code or the day-to-day grind of carefully protecting finances from the onslaught of medical and other bills? It is just too much, and I will make mistakes –that’s why I need the help of someone with specialized training. I will not presume to tell anyone, particularly caregivers, how to manage their money. I can, however, offer a few tips that changed the way I view money, helped me keep a superior credit rating and avoid bankruptcy while dealing with the massive medical bills we incurred. I developed a simple 1-2-30 system. For example, when taking care of my physical health, I get: 1 Annual Flu Shot 2 Well Visits With an internist/family physician (including a physical) 30 minutes per day (average) of some kind of physical activity That same 1-2-30 system also has an easy component for dealing with money. 1 Charity to Financially Support Over the years, I discovered that thinking about someone else’s struggles and challenges helped put mine in perspective. Even though my wife and I founded a non-profit ourselves, we give to others that are totally unrelated to what we do at Standing With Hope, and also have nothing to do with the caregiving or disability issue my family faces. We found that by focusing on issues other than our own, it allowed us to “get outside ourselves,” if only for a brief moment. Regardless of how small the amount, contributing to the betterment of others changes perspective and expands the heart of an individual. Be sure to keep all charitable donation receipts and give them to your CPA. 2 Meetings Per Year With a CPA (Minimum) The financial matters caregivers deal with are daunting on a good day and insane on a bad one. One person carrying all of the financial burdens of caregiving – while caring for someone else medically and physically – is just too much and errors are inevitable. Having a second (or third) set of eyes helps bring organization and peace of mind. A good CPA is a great ally. For non-caregivers, if you see a caregiver who is struggling, try to avoid platitudes like, “You’re in our hearts and prayers.” Instead, try asking them, “Do you have a CPA you regularly see?” That simple question reframes the problem while directing the caregiver toward a healthier financial path, and can circumvent a slew of problems. Introducing the thought of someone connected to quality and affordable financial advice  can help them manage bills, stay current on taxes, learn to operate within a budget and take advantage of tax-deductible expenses incurred in most caregiving scenarios. When dealing with a long-term medical issue, keeping up with medical bills and receipts is critical, and operating within a budget is paramount. (Why can’t we send more CPAs to Washington D.C. instead of lawyers, by the way?) At the end of weary days, it is comforting to know that a trained, objective pair of eyes is helping keep finances in order. $30 Per Paycheck Into Savings Caregiving often means living paycheck to paycheck – on a good week. Financially treading water for as long as caregiving requires can cause even the stoutest checkbooks to grow weary, and getting ahead sometimes seems out of the question. Putting something in a savings account (or a Health Savings Account) can sound like it asks too much while drowning in bills. Squirreling away even a little bit, however, goes a long way towards a better night’s sleep. Anyone can implement these 1-2-30 steps today, and immediately generate positive benefits to any situation. These simple ideas can ease the craziness and stress in a caregiver’s life – and they represent a few of the reasons why you should “hug your CPA today!” Peter W. Rosenberger, President, Standing With Hope. Peter operates a non-profit prosthetic limb outreach program to amputees overseas. Standing With Hope recently launched an outreach to caregivers that draws upon Peter’s vast experience as a caregiver for his wife, Gracie, for 27 years through her now 78 operations, multiple amputations, 60+ doctors, 12 hospitals, 7 insurance companies and $9 million in medical costs. He hosts a weekly radio show on Nashville’s 1510 WLAC for caregivers.

Helpful Tax Tips if You’re Moving this Summer

If you make a work-related move this summer, you may be able to deduct the costs of the move. This may apply if you move to start a new job or to work at the same job in a new job location. The IRS offers the following tips on moving expenses you may be able to deduct on your tax return.

In order to deduct moving expenses, you must meet these three requirements:

1. Your move closely relates to the start of work. Generally, you can consider moving expenses within one year of the date you first report to work at a new job location. Additional rules apply to this requirement.

2. You meet the distance test.  Your new main job location must be at least 50 miles farther from your former home than your previous main job location was. For example, if your old main job location was three miles from your former home, your new main job location must be at least 53 miles from that former home.

3. You meet the time test.  After you move, you must work full time at your new job location for at least 39 weeks during the first year. Self-employed individuals must meet this test and also work full time for a total of at least 78 weeks during the first 24 months upon arriving in the general area of their new job location. If your income tax return is due before you have satisfied this requirement, you can still deduct your allowable moving expenses if you expect to meet the time test.

See Publication 521, Moving Expenses, for more information about these rules. If you can claim this deduction, here are a few more tips from the IRS:

• Travel.  You can deduct transportation and lodging expenses for yourself and household members while moving from your former home to your new home. You cannot deduct the cost of meals during the travel.
• Household goods.  You can deduct the cost of packing, crating and transporting your household goods and personal property. You may be able to include the cost of storing and insuring these items while in transit.
• Utilities.  You can deduct the costs of connecting or disconnecting utilities.
• Nondeductible expenses.  You cannot deduct as moving expenses any part of the purchase price of your new home, the costs of buying or selling a home, or the cost of entering into or breaking a lease. See Publication 521 for a complete list.
• Reimbursed expenses.  If your employer reimburses you for the costs of a move for which you took a deduction, you may have to include the reimbursement as income on your tax return.
• Update your address.  When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive mail from the IRS. File Form 8822, Change of Address, to notify the IRS.
• Tax form to file.  To figure the amount of your deduction for moving expenses, use Form 3903, Moving Expenses. 

Get more details about this topic in Publication 521 and Form 3903. Both are available at IRS.gov or by calling 800-829-3676.

Additional IRS Resources:

• Publication 521, Moving Expenses
• Form 8822, Change of Address
• Form 3903, Moving Expenses
• Can I Deduct My Moving Expenses? – Interactive Tax Assistant tool
• Tax Topic 455 – Moving Expenses

IRS YouTube Videos:

• Moving Expenses – English | Spanish | ASL

IRS Podcasts:

• Moving Expenses – English | Spanish

Tips to Start Planning Next Year's Tax Return

For most taxpayers, the tax deadline has passed. But planning for next year can start now. The IRS reminds taxpayers that being organized and planning ahead can save time and money in 2014. Here are six things you can do now to make next April 15 easier.

1. Adjust your withholding.  Each year, millions of American workers have far more taxes withheld from their pay than is required. Now is a good time to review your withholding to make the taxes withheld from your pay closer to the taxes you’ll owe for this year. This is especially true if you normally get a large refund and you would like more money in your paycheck. If you owed tax when you filed, you may need to increase the federal income tax withheld from your wages. Use the IRS Withholding Calculator at IRS.gov to complete a new Form W-4, Employee's Withholding Allowance Certificate.

2. Store your return in a safe place.  Put your 2012 tax return and supporting documents somewhere safe. If you need to refer to your return in the future, you’ll know where to find it. For example, you may need a copy of your return when applying for a home loan or financial aid. You can also use it as a helpful guide for next year's return.

3. Organize your records.  Establish one location where everyone in your household can put tax-related records during the year. This will avoid a scramble for misplaced mileage logs or charity receipts come tax time.

4. Shop for a tax professional.  If you use a tax professional to help you with tax planning, start your search now. You’ll have more time when you're not up against a deadline or anxious to receive your tax refund. Choose a tax professional wisely. You’re ultimately responsible for the accuracy of your own return regardless of who prepares it. Find tips for choosing a preparer at IRS.gov.

5. Consider itemizing deductions.  If you usually claim a standard deduction, you may be able to reduce your taxes if you itemize deductions instead. If your itemized deductions typically fall just below your standard deduction, you can ‘bundle’ your deductions. For example, an early or extra mortgage payment or property tax payment, or a planned donation to charity could equal some tax savings. See the Schedule A, Itemized Deductions, instructions for the list of items you can deduct. Planning an approach now that works best for you can pay off at tax time next year.

6. Keep up with changes.  Find out about tax law changes, helpful tips and IRS announcements all year by subscribing to IRS Tax Tips through IRS.gov or IRS2Go, the mobile app from the IRS. The IRS issues tips regularly during the summer and tax filing season.

You can find forms and publications at IRS.gov or order them by calling 800-TAX-FORM (800-829-3676).

Additional IRS Resources:

• IRS Withholding Calculator tool
• Form W-4, Employee's Withholding Allowance Certificate
• Publication 505, Tax Withholding and Estimated Tax
• Publication 552, Recordkeeping for Individuals
• Choosing a Tax Professional
• Schedule A, Itemized Deductions and instructions

IRS YouTube Videos:

• IRS Withholding Calculator - English | Spanish | ASL
• IRS2Go 3.0 - English | Spanish
• Record Keeping - English | Spanish | ASL
• Standard Versus Itemized Deductions - English | Spanish | ASL

IRS Podcasts:

• Standard Versus Itemized Deductions - English | Spanish
• IRS2Go 3.0 - English | Spanish

Coverdell or 529?

http://quicken.intuit.com/support/help/money-tips-for-students/how-to-choose-between-tax-free-college-savings-accounts/INF16240.html;jsessionid=87S2oOyxoaaGDOKZpe-NgQ**.408-7

2011, Individual Income Tax Returns (Publication 1304) Now Available

WASHINGTON — The Internal Revenue Service announced the availability of Statistics of Income—2011, Individual Income Tax Returns (Publication 1304), on irs.gov/taxstats. U.S. taxpayers filed 145.4 million individual income tax returns for tax year 2011. This was up 1.7 percent from 2010.

Also in tax year 2011, the adjusted gross income less deficit reported on those returns totaled $8.4 trillion, a 3.5-percent increase from the prior year.

The report is based on a sample drawn from the 145.4 million individual income tax returns filed for tax year 2011 and provides estimates of sources of income, adjusted gross income, exemptions, deductions, taxable income, income tax, modified income tax, tax credits, self-employment tax and tax payments.

Classifications include tax status, size of adjusted gross income, marital status, age and type of tax computation. A brief text reviews the requirements for filing tax returns, explains the changes in tax law and describes the sample used to produce the report. Publication 1304 is currently available for download at irs.gov/taxstats.

For more information about these data, please write to the Director, Statistics of Income Division, RAS:S, Internal Revenue Service, 1111 Constitution Avenue, K-Room 4122, Washington, DC 20224.

Kiplinger's Personal Finance

"Get Ready for Obamacare"
"President Obama signed the affordable Care Act into law, its major provisions are nearly ready for prime time.  Beginning January 1, insurers will no longer be able to reject people or charge higher rates because of preexisting conditions; the premiums they charge older people will be capped; most plans won't be able to impose annual or lifetime caps on coverage; and to control the cost of insuring the older and sicker, everyone-including the young and healthy- must have health insurance or face a penalty.  In 2014 the penalty is 1% of annual income or $95 per person(whichever is higher); the penalty increase to 2.5% of income or $695 per person in 2016.
"If you don't have health insurance through an employer-because you're self-employed or unemployed, you work for an employer that doesn't offer health benefits, or you simply decided to go bare-you may be eligible to receive a subsidy to help reduce your premiums.  But to qualify, you have to buy a policy from you state's new health insurance exchange.  If you work for an employer that does offer coverage, you can still choose to shop on the exchanges, but you can't get a subsidy if your employer proves "affordable" coverage.  Affordable means the employee's share of premiums for employee-only coverage is no more than 9.5% of household income.  The employer's plan must also be considered "adequate," which means it covers 60% of the average health care costs in the area(based on a complicated actuarial calculation).
"Because of the health care law's new protections, young, healthy people won't get as big of a break on premiums and are likely to pay higher rates than in the past.  Older people may pay less, especially if they have health conditions that jacked up their premiums.  But the changes will depend on your state's current rules, competition in the marketplace and the level of coverage you have now...."

Give Tax Records a Mid-Year Tune-up this Summer

IRS Summertime Tax Tip 2013-23

During the summer, you may not think about doing your taxes, but maybe you should. Some of the expenses you’ve paid over the past few months might qualify for money-saving tax credits or deductions come tax time. If you organize your tax records now, you’ll make tax filing easier and faster when you do them next year. It also helps reduce the chance that you’ll lose a receipt or statement that you need.

Here are some tips from the IRS on tax recordkeeping.

• You should keep copies of your filed tax returns as part of your tax records. They can help you prepare future tax returns. You’ll also need them if you need to file an amended return.
• You must keep records to support items reported on your tax return. You should keep basic records that relate to your federal tax return for at least three years. Basic records are documents that prove your income and expenses. This includes income information such as Forms W-2 and 1099. It also includes information that supports tax credits or deductions you claimed. This might include sales slips, credit card receipts and other proofs of payment, invoices, cancelled checks, bank statements and mileage logs.
• If you own a home or investment property, you should keep records of your purchases and other records related to those items. You should typically keep these records, including home improvements, at least three years after you have sold or disposed of the property.
• If you own a business, you should keep records that show total receipts, proof of purchases of business expenses and assets. These may include cash register tapes, bank deposit slips, receipt books, purchase and sales invoices. Also include credit card receipts, sales slips, canceled checks, account statements and petty cash slips. Electronic records can include databases, saved files, emails, instant messages, faxes and voice messages.
• If you own a business with employees, you should generally keep all employment-related tax records for at least four years after the tax is due, or after the tax is paid, whichever is later.
• The IRS doesn’t require any special method to keep records, but it’s a good idea to keep them organized and in one place. This will make it easier for you to prepare and file a complete and accurate return. You’ll also be better able to respond if there are questions about your tax return after you file.

You’ll find more information about recordkeeping for individuals in Publication 17, Your Federal Income Tax. Business owners should check Publication 583, Starting a Business and Keeping Records. Both are available at IRS.gov or by calling 800-TAX-FORM (800-829-3676). Video and audio files explaining recordkeeping requirements are also available on our IRS video portal at www.irsvideos.gov.

Additional IRS Resources:
• Publication 17, Your Federal Income Tax 
• Tax Topic 305 – Recordkeeping
• Publication 583, Starting a Business and Keeping Records IRS YouTube Videos:
• Record Keeping – English   | Spanish   | ASL   

Ten Tax Tips for Individuals Selling Their Home

If you’re selling your main home this summer or sometime this year, the IRS has some helpful tips for you. Even if you make a profit from the sale of your home, you may not have to report it as income.

Here are 10 tips from the IRS to keep in mind when selling your home.

1. If you sell your home at a gain, you may be able to exclude part or all of the profit from your income. This rule generally applies if you’ve owned and used the property as your main home for at least two out of the five years before the date of sale.

2. You normally can exclude up to $250,000 of the gain from your income ($500,000 on a joint return). This excluded gain is also not subject to the new Net Investment Income Tax, which is effective in 2013.

3. If you can exclude all of the gain, you probably don’t need to report the sale of your home on your tax return.

4. If you can’t exclude all of the gain, or you choose not to exclude it, you’ll need to report the sale of your home on your tax return. You’ll also have to report the sale if you received a Form 1099-S, Proceeds From Real Estate Transactions.

5. Use IRS e-file to prepare and file your 2013 tax return next year. E-file software will do most of the work for you. If you prepare a paper return, use the worksheets in Publication 523, Selling Your Home, to figure the gain (or loss) on the sale. The booklet also will help you determine how much of the gain you can exclude.

6. Generally, you can exclude a gain from the sale of only one main home per two-year period.

7. If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is usually the one you live in most of the time.

8. Special rules may apply when you sell a home for which you received the first-time homebuyer credit. See Publication 523 for details.

9. You cannot deduct a loss from the sale of your main home.

10. When you sell your home and move, be sure to update your address with the IRS and the U.S. Postal Service. File Form 8822, Change of Address, to notify the IRS.

For more information on this topic, see Publication 523. It’s available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Additional IRS Resources:
• Publication 523, Selling Your Home• Questions and Answers on the Net Investment Income Tax
• Form 8822, Change of Address 
• U.S. Postal Service

IRS YouTube Videos:
• Selling Your Home – English | Spanish | ASL

IRS Podcasts:
• Selling Your Home – English | Spanish