Archives for January 2013

Making It through Retirement

Most people when they get their first job start thinking about retirement. It seems like a faraway dream for many, but may be closer for other. How can a person prepare for retirement? What are their goals in regards to their retirement money? By looking at a client’s goals, determine if they want to have money to last through their life expectancy or make it last for generations. Knowing the client’s goals will help determine how to invest and help forecast what the returns will be on investments.

There are many unpredictable parts to determining the return on your assets. There is never an ironclad guarantees that your returns will come back at the rate you estimate. By creating forecasts at different rates and risks will help clients determine what could be a possible return on their investment.

The first step to consider is making sure there is adequate income generated and guaranteed through retirement. Annuities are good way to create a stream of income, as long as the underlying issuer is strong, but do not put all your eggs into one basket. It is better to have a diverse portfolio then to put all your money in one investment.

There are many variables that will make forecasting difficult to predict, including inflation, contingencies, and many other unknowns that can come from anywhere. Evaluate the effect of inflation on assets by calculating higher inflation rates than what we experience in today’s low-inflation environment. This will help to combat any changes that could affect income. It is also important to run scenarios over catastrophic long-term issues to insure that there is income to cover anything that could happen.

While some people just want to have enough to make it through retirement, some clients would like to leave a legacy for their children or multiple generations. To help achieve this goal, it is important to keep the burden of estate taxes as low as possible.

Overall, it is the client’s money and it is important to help them achieve their goals in how they want their money to work for them.

Here at Crowley & Halloran CPA’s, our consultants would be happy to help you plan and manage your business budget. Click here to request a proposal.

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A Delay to Tax Season

Since Congress made changes to the tax laws under the American Taxpayer Relief Act (ATRA), the IRS has announced that there will be a delay in the start of tax season. The Internal Revenue Service plans to open the 2013 filing season on January 30. At that time, they will begin processing individual income tax returns.

With the new changes enacted on January 2, the IRS needs time to update forms and complete testing on the processing system. The forms will reflect many of the changes made to tax laws by Congress. This means that for the majority of taxpayers, more than 120 million households, will be able to start filing their taxes January 30, 2013.

The remaining households will be able to start filing in late February or March due to the extensive forms and processing changes that need to be made to the system. The groups that this late start will affect the most are households claiming residential energy credits, depreciation of property, or general business credits. This should not cause too many problems because this group of individuals tend to file closer to the April 15th deadline or even file for extensions.

While the IRS has been working hard to open the tax season for individuals as soon as possible, they want to ensure that the forms and processes are updated. The IRS is required to update forms and instructions as well as making critical processing changes to the system adjustments before accepting tax returns.

The IRS believes that the vast majority of taxpayers will be able to start filing tax returns, regardless of whether they are paper or electronic, on January 30. Anyone affected by the Alternative Minimum Tax (AMT) along with anyone claiming state and local sales tax deduction, higher education tuition and fees deduction, and educator expenses deduction will be able to file on January 30.

The IRS will post more information on the other forms as they become available.

Here at Crowley & Halloran CPA’s, our consultants would be happy to help you plan and manage your business budget. Click here to request a proposal.

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It’s Tax Season: Here’s Some Write-Offs You Should Know About

Yes, it’s the New Year, which means it’s time to gather your W-2’s and start preparing your tax return. Yes, you’ve got until April to file, but why not start getting your information together now? And a big part of these documents you should be gathering are write-offs. You should already be well aware that you can write-off charitable contributions, money you gave to church and mortgage interest, but here’s a look at some other things that you can write-off to enhance your tax return or minimize what you owe to the IRS.

Student Loan Interest: If you’re still paying off student loans, you can claim the interest paid on them as a write-off.

Business Expenses: Have you purchased items for work that haven’t been covered by your company? Perhaps calendars, electronics, a cell phone, etc.? Write the expenses off on your taxes. As long as your company didn’t buy them for you, that’s an eligible write-off.

Home Business Grant: Do you work out of your home? Then you’re likely eligible for a home business grant, where you can write-off things like energy and utility bills, Internet costs, phone bills, ink cartridges and the costs of any new office equipment on your taxes.

Job Hunting Costs: As our country still lingers from its economic recession, the reality is that many Americans are still looking for work. And with job hunting comes travel expenses, mailing costs, food and room (in the case of overnight trips) and cab fares. Don’t let the opportunity to write these expenses off pass you by should you qualify.

Relocation Costs: Did you get a job within 50 miles of your original address that requires you to move? If you’re not given a relocation allowance by your new employer, these expenses can be written off on your tax return. This includes moving expenses, parking expenses, tolls, etc.

Child Care: You should already be aware of the fact that you can claim your children as a dependent for a tax credit, but did you know that you can also claim up to 35 percent of what you pay for child care services – that is, if you have your children in child care while you’re working? You can – and it’s an opportunity you shouldn’t be passing up. Child care is expensive – don’t be shy about recouping some of the costs.

While tax season for most is anything but fun, utilizing write-offs and deductions to the fullest extent can put money back into your pocket. Now we’re talking fun!

Here at Crowley & Halloran CPA’s, our consultants would be happy to help you plan and manage your business budget. Click here to request a proposal.

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Steps to Prepare for the Tax Season

The start of a new year is a busy time for any individual. Although the year has just begun, it is time to start preparing for the tax season. By starting the preparations early, it is easier to avoid mistakes and ensure the paperwork is ready before deadlines start coming up.

Gather and Organize Paperwork

Although the W2 forms are not normally sent out or even prepared until the middle to the end of January, the forms are only part of the paperwork involved in taxes. Paperwork will also include the tax deductions, charity donation receipts and other receipts related to taxes.

Gathering as much paperwork and documentation as possible beforehand will make it easier to put the information into the tax documents after the W2 forms finally arrive. Early organization and preparation simplifies the amount of organization that is required later, which makes it easier to complete and submit the IRS forms before the due date.

Write Down Questions

Tax paperwork and preparation can lead to many complicated questions. Taking extra time to write down any questions that arise will prevent confusion when the paperwork is being prepared. The taxes that are related to new events, such as filing jointly after marriage when compared to filing separately, can lead to many questions.

When new situations arise or new tax laws are applied to the paperwork, it is important to write down the questions and find out the answers before working on the paperwork. The preparatory step makes it easier to avoid accidental mistakes.

Review Any Changes to Laws

Laws related to taxes are constantly changing as world events and the situation of the country takes different paths. Since the laws can change when new regulations are passed, every individual should learn about any changes to the filing system or any regulations that might apply to a personal situation.

After learning about any changes, determine if other questions arise. The legal aspects of taxes are often confusing and complicated, particularly when it differs from previous years. If any new questions arise related to legalities, then it is important to add the question to the list.

Look for Mistakes

Financial statements are not always accurate. Before using any financial statements on tax paperwork, it is important to look for and correct any mistakes. Although mistakes are uncommon, catching problems and changing the data to accurate figures will reduce the risk of accidentally filing the wrong information.

With the tax season around the corner, it is important to start taking steps to prepare the paperwork and documentation. Early organization is a key part of simplifying the process and avoiding complications when the tax paperwork is filed.

Here at Crowley & Halloran CPA’s, our consultants would be happy to help you plan and manage your business budget. Click here to request a proposal.

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The Saver’s Credit for Retirement

For many low- and moderate-income workers it can be hard to save for what seems like an elusive retirement. Many feel like they might work long after retirement age because saving just seems impossible. The IRS has a special tax credit that can help offset the cost of setting up a retirement saving plan.

This tax credit, known as the retirement saving contributions credit or the saver’s credit, helps offset part of the first $2,000 dollars that workers voluntarily contribute to an IRA or 401(k) plan. This credit is only for eligible workers that set up a new retirement account or add to an existing account before April 15, 2013. To find out what your filing status is for this tax credit see Form 8880 for instructions.

So what qualifies you for this tax credit and who can claim this credit? Several groups of workers that can qualify for the credit, including:

  • Married couples that file jointly with incomes up to $57,500 in 2012 or $59,000 in 2013
  • Heads of households with incomes up to $43,125 in 2012 or $44,250 in 2013
  • Married individuals filing separately and singles with incomes up to $28,750 in 2012 or $29,500 in 2013

Other rules that apply to the credit are:

  • You must be an eligible taxpayer 18 years old and older.
  • You cannot be claimed as a dependent on anyone else’s tax return.
  • You cannot not be a student, which is someone enrolled full-time during any part of 5 calendar months during the year.

Like any other tax credit this can increase a taxpayer’s refund or reduce the amount of taxes owed. Even though the maximum tax credit is $1000 for individuals and $2000 for married couples, the IRS wants to caution taxpayers. This tax credit is usually much lower because of other deductions and credit and for some taxpayers it may even be nothing. This should not discourage workers from trying to get the credit. Even a little can help a lot.

Here at Crowley & Halloran CPA’s, our consultants would be happy to help you plan and manage your business budget. Click here to request a proposal.

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