Applying for Social Security Benefits at Age 62.

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Thinking about retiring?
Early retirement is an option for many taxpayers. However, before making the decision, you need to be aware of a few facts.
It’s important to understand that the more years of work you put in after the age of 62 (the earliest possible social security retirement age), the more social security benefits you’ll have to look forward to. Retiring at the age of 62 means that your benefits will be about 25 percent lower than they would be if you waited until you reached full retirement age.
If you still decide to go ahead with retirement at the age of 62, be sure to apply for your benefits about three months before the date you’d like them to start. You’ll apply online at www.ssa.gov, by phone at 1.800.325.0778 or in person at your local social security office.
During the application process, you’ll need some or all of the documents below:

  • Your social security number
  • Your birth certificate.
  • Your W-2 forms or self-employment tax return from last year.
  • Your military discharge papers, if applicable.
  • Your spouse’s birth certificate and social security number if he or she is applying for benefits.
  • Your children’s birth certificates and social security numbers if you’re applying for children’s benefits.
  • Proof of U.S. citizenship or lawful alien status if you (or a spouse or child applying for benefits) were not born here.
  • The name of your financial institution, the routing number and your account number so that benefits can be deposited directly into your account.


Note: All documents must be original documents or copies certified by the issuing office. You can mail or bring these documents to your local social security office.
Because your age of retirement ultimately impacts the amount of social security benefits that you can expect to receive, it’s absolutely crucial for you to consult me about the options you have available. The social security website also contains countless resources to help you make the most informed decision possible.

The Rise of Identity Theft and Tax Scams: How to avoid being a victim

IRS Scam WarningEach year, tax scams seem to run more and more rampant, making proper security and privacy protocols critically important. According to the Bureau of Justice statistics, approximately 1 in 18 Americans have their identities stolen each year. With such a consistent rise in identity theft and tax scams, it’s imperative that you keep your information safe and secure from criminals, not only in a work setting but also in your personal life.
The most common form of identity theft is the use of personal information to fraudulently obtain government benefits and tax refunds. There are a variety of ways identities can be stolen, such as by accessing existing financial accounts, creating new accounts with stolen credentials, through internet services and by social impersonation.
The consequences of identity theft can be devastating and can cause an array of financial losses. Scammers can gain access to accounts that access money, including bank accounts, retirement accounts, investment accounts and PayPal accounts. This can ultimately affect your credit score, which can take years of hard work to restore. When dealing with credit score damage, getting financing for anything can be virtually impossible. It can affect major purchases (home mortgage, auto loans, college tuition) and lines of credit (home improvement or furniture, clothing or jewelry purchases).
Here are some methods often used by scammers:

  • Scare tactics. Sophisticated hoaxers try to scare people into making immediate payments. They may threaten arrest, deportation or the revocation of your driver’s license or professional license if you don’t pay. Emails from scammers will often contain a fake IRS document with a phone number or email address to reply to.
  • Caller ID spoofs. Scammers are known to alter caller IDs to make it appear that the IRS is calling. Callers will use IRS titles and fake badge numbers to appear legitimate. They may use online resources to get your personal information to make the call sound official.
  • Fake IRS letterhead. Scam artists will copy official IRS letterhead to use in email or regular mail sent to victims.

Keep in mind, the IRS will never:

  • Call you about your tax bill without first sending you a bill in the mail.
  • Demand that you pay taxes and not allow you to question or appeal the amount that you owe.
  • Require that you pay your taxes a certain way. For instance, require that you pay with a prepaid debit card or any specific type of tender.
  • Ask for credit or debit card numbers over the phone.
  • Threaten to bring in police or other agencies to arrest you for not paying.
  • Threaten you with a lawsuit.

More than anything, it’s important to remember to never give away personal information by phone or email to an untrusted or suspicious source. If you have any questions on how you can protect yourself from identity theft, please let us know.

IMPORTANT News for Tax Season

tax updateYour Tax Appointment
How to come prepared


Your tax appointment—it comes around every year and it’s always a good idea to start preparing for it early. In preparation, you should contact me soon to reserve a time for your appointment. Be sure to choose a time when you expect to have all of the documents you need for your appointment. If you’re not sure what you need to bring, give us a call and we’ll help guide you.

If relevant to your circumstances, you may also need to bring in social security numbers for all dependents, Form 8332 (if you are a noncustodial parent), last year’s tax return and any postcards or tax booklets received from the IRS. If you have any questions about whether you have all of the documents and information you need for our appointment, feel free to give me a call. I’ll be glad to help.

Eligibility Requirements for Two Popular Tax Credits
IRS requires us to ask you more questions


In an effort to prevent taxpayers from improperly claiming the Child Tax Credit (CTC) and American Opportunity Tax Credit (AOTC), the IRS is implementing additional preparer due diligence requirements and requesting preparers to verify more information from clients who may be eligible to claim these credits. Because of these new requirements, I’ll be asking more questions to verify your eligibility. Following are some of the “tests” I’ll use to determine whether you qualify.

The CTC is a tax credit that may be worth as much as $1,000 per qualifying child, depending on your income.

The AOTC is a credit for qualified education expenses paid for an eligible student for the first four years of higher education. You can get a maximum annual credit of $2,500 per eligible student.

IRS To Delay Certain Refunds
Important info for those claiming the Earned Income Tax Credit


Per the recently enacted PATH Act, refunds for returns claiming the Earned Income Tax Credit (EITC) and Additional Child Tax Credit (CTC) will not be released from the IRS until February 15. This change will take effect this upcoming tax season.

The IRS will start processing tax returns once the filing season begins (no change from prior years); however, returns claiming the EITC or CTC may take up to four weeks to process.

If you claim either of these credits and usually file early, plan on a slight delay in receiving your refund next year.

If you are not claiming either of these credits and are entitled to a refund, you can expect it in the normal time frame. The IRS issues most refunds in less than 21 calendar days.

If you have questions, please give us a call.

Using Dependent Care Benefits for Day Care Expenses

Taxes 1040 w CalculatorA closer look at exclusions and deductions

Some employers offer dependent care benefits to employees. If you receive such benefits, you may be able to exclude all or part of them from your income.


Dependent care benefits include:

  • Amounts your employer paid directly to either you or your care provider for the care of your qualifying person while you work.
  • The fair market value or care in a day care facility provided or sponsored by your employer.
  • Pre-tax contributions you made under a dependent care flexible spending arrangement.


If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. Your employer will be able to tell you whether your benefit plan qualifies.


The amount you can exclude or deduct is limited to the smallest of:

  • The total amount of dependent care benefits you received during the year.
  • The total amount of qualified expenses you incurred during the year.
  • Your earned income.
  • Your spouse’s earned income.
  • $5,000 ($2,500 if married filing separately).


If you are eligible to claim this exclusion, I’d be glad to help you with it.

Qualified Charitable Distributions

tax tipsMaking a tax-free contribution from your IRA

Knowing the ins and outs of qualified charitable distributions (QCD) can ultimately save you time and money down the road. A QCD is generally a nontaxable distribution from your IRA account made to an organization eligible to receive tax deductible contributions. If you’re over the age of 70½, you may transfer up to $100,000 from your IRA to a charitable organization with­out having to include the income on your Form 1040. If you file a joint return, your spouse can also have a QCD and exclude up to $100,000.

Making this type of distribution allows you to report less income, which could help reduce the impact on taxable social security benefits. Here are a few additional things to keep in mind:

  • Any QCD in excess of the $100,000 exclusion limit is included in income as any other distribution.
  • The amount of the QCD is limited to the amount of the distribution that would otherwise be included in income.
  • If your IRA includes non­deductible contributions, the distribution is first considered to be paid out of otherwise taxable income.


A QCD will count towards your required minimum distribution; however, you cannot claim a charitable contribution deduction for any QCD not included in your income.

Deducting Business Travel Expenses

Good recordkeeping is crucial
tax calculatorWhen traveling from home overnight for business, it’s wise to keep track of all expenses you incur, because they may be deductible.


Deductible travel expenses generally include, but are not limited to the costs of:

  • Travel by airplane, train, bus or car between your home and your business destination.
  • Fares for taxis or other types of transportation between the airport or train station and your hotel, the hotel and the work location and from one customer to another, or from one place of business to another.
  • Shipping of baggage and tradeshow material between your regular and temporary work locations.
  • Meals and lodging.
  • Using your car while at your business destination. You can deduct either actual expenses or the standard mileage rate, but you must make this choice during the first year of using your car for business; after that, there are restrictions on choosing a method. You can also deduct business-related tolls and parking fees. If you rent a car, you can deduct only the business-use portion for the expenses.
  • Dry cleaning and laundry.
  • Business calls while on your business trip.
  • Tips you pay for services related to any of these expenses.
  • Other similar ordinary and necessary expenses related to your business travel.


Instead of keeping records of your meal expenses and deducting the actual cost, you can generally use a standard meal allowance, which varies depending on where you travel. The deduction for business meals is generally limited to 50% of the unreimbursed cost.


For all employees, allowable travel expenses will be figured on Form 2106 or Form 2106-EZ. The allowable expenses are then carried to Form 1040, Schedule A. In order to successfully deduct business travel expenses, the deductions must exceed 2% of your adjusted gross income.

Temporary Rental of a Room in Your Home

Some tax-free income never hurts

for rentMany taxpayers often leave town when a local festival or event draws in tourists. If you’re one of them, you might be able to rent out your house for a few days and earn tax-free income.
Taxpayers who rent out their own homes for fewer than 15 days per year receive tax-free income from the rental. To qualify for this tax-free treatment, you must rent out your home for 14 days or less and personally use the home for 15 days or more during the year.
Please note, no deduction is allowed for any rental-related expense, such as getting the house professionally cleaned before or after your visitors arrive. However, deductions of mortgage interest and property taxes are allowed on Schedule A for the entire year.

Your Tax Appointment: How to come prepared

tax appointmentYour tax appointment—it comes around every year and it’s always a good idea to start preparing for it early. In preparation, you should contact me soon to reserve a time for your appointment. Be sure to choose a time when you expect to have all of the documents you need for your appointment. If you’re not sure what you need to bring, give me a call and I’ll help guide you. For now, here are a few things you’ll want to bring along, if they’re applicable to your unique circumstances:

  • W-2 forms from all employers that you had throughout the year. Employers will issue W-2 forms by January 31. If you discover that a form is missing, contact the employer.
  • 1099 forms reporting income from interest, dividends, pensions, self-employment, government payments or the sale of property.
  • A list of other income that you’ve received during the year, even if you don’t have specific statements.
  • Schedule K-1, if you were a member of a partnership, a stockholder in an S corporation or a beneficiary of a trust or an estate.
  • Stock sale information about the sale and original cost of stock.
  • Real estate sale information showing the cost, sales prices and expenses of the sale.
  • Records of all income received if you’re a business owner or farmer. Be sure to include expense records for inventory, supplies, business equipment and other business expenses. Payroll records may also be necessary.
  • Child care information, including the name, address and ID number of the provider(s), as well as the amount of the expense.
  • Moving expense records for unreimbursed job-related moves of more than 50 miles.
  • Medical expense records, including those for prescription drugs, doctor, dental, hospital bills, medical insurance premiums and the mileage to and from the doctor’s office. These expenses are deductible if they exceed 10% of your adjusted gross income (7.5% for ages 65 and older until December 31, 2016).
  • Health Insurance forms. If you participate in the Health Insurance Marketplace, be sure to bring along Form 1095-A, which you’ll receive in the mail.
  • Charitable contribution receipts. All contributions of any amount require a receipt. Single contributions of $250 or more require a detailed statement from the charitable organization prior to the filing of your taxes.
  • Deductible expense records incurred as an employee, including union dues and tax preparation fees.
  • Property tax bills and mortgage interest statements. You may be able to itemize deductions if you own a home. The interest on home equity loans and a vacation home may also be deductible.

If relevant to your circumstances, you may also need to bring in social security numbers for all dependents, Form 8332 (if you are a noncustodial parent), last year’s tax return and any postcards or tax booklets received from the IRS. If you have any questions about whether you have all of the documents and information you need for your appointment, feel free to give us a call. We’ll be glad to help.

IRS Tax Tips for Deducting Gifts to Charity

donationThe holiday season often prompts people to give money or property to charity. If you plan to give and want to claim a tax deduction, there are a few tips you should know before you give. For instance, you must itemize your deductions.




Here are six more tips that you should keep in mind:


  1. Give to qualified charities.You can only deduct gifts you give to a qualified charity. Use the IRS Select Check tool to see if the group you give to is qualified. You can deduct gifts to churches, synagogues, temples, mosques and government agencies. This is true even if Select Check does not list them in its database.
  2. Keep a record of all cash gifts.Gifts of money include those made in cash or by check, electronic funds transfer, credit card and payroll deduction. You must have a bank record or a written statement from the charity to deduct any gift of money on your tax return. This is true regardless of the amount of the gift. The statement must show the name of the charity and the date and amount of the contribution. Bank records include canceled checks, or bank, credit union and credit card statements. If you give by payroll deductions, you should retain a pay stub, a Form W-2 wage statement or other document from your employer. It must show the total amount withheld for charity, along with the pledge card showing the name of the charity.
  3. Household goods must be in good condition.Household items include furniture, furnishings, electronics, appliances and linens. These items must be in at least good-used condition to claim on your taxes. A deduction claimed of over $500 does not have to meet this standard if you include a qualified appraisal of the item with your tax return.
  4. Additional records required.You must get an acknowledgment from a charity for each deductible donation (either money or property) of $250 or more. Additional rules apply to the statement for gifts of that amount. This statement is in addition to the records required for deducting cash gifts. However, one statement with all of the required information may meet both requirements.
  5. Year-end gifts.Deduct contributions in the year you make them. If you charge your gift to a credit card before the end of the year it will count for 2015. This is true even if you don’t pay the credit card bill until 2016. Also, a check will count for 2015 as long as you mail it in 2015.
  6. Special rules.Special rules apply if you give a car, boat or airplane to charity. If you claim a deduction of more than $500 for a noncash contribution, you will need to file another form with your tax return. For more on these rules, visit IRS.gov.


In summary, remember to keep documentation on all charitable donations, large or small.  If you are donating an item worth over $500 remember to consult your tax advisor.


Finally, if you are planning to give to charity before 12/31 to help to offset your 2015 tax, call your tax preparer for a tax projection ASAP to see what amount will give you the most benefit. Happy giving!

Keeping Up With Your IRA: Tax Season Tips

tax tipsIf you’re one of the millions of Americans who owns either a traditional individual retirement account (IRA) or a Roth IRA, then the approach of tax season should serve as a reminder to review your retirement savings strategies and make any changes that will enhance your prospects for long-term financial security. It’s also a good time to open an IRA if you don’t already have one.
The deadline for funding an IRA for tax-year 2014 is April 15. The following checklist should provide you with food for thought as you plan your IRA moves in the coming weeks.
Which Account: Roth IRA or Traditional IRA?
The primary difference between a traditional IRA and a Roth IRA is the tax treatment of contributions and distributions (withdrawals). Traditional IRAs may allow a tax deduction based on the amount of a contribution, depending on your income level. Any account earnings compound on a tax-deferred basis, and distributions are taxable at the time of withdrawal at then-current income tax rates. Roth IRAs do not allow a deduction for contributions, but account earnings and qualified withdrawals are tax free.1
In choosing between a traditional and a Roth IRA, you should weigh the immediate tax benefits of a tax deduction this year against the benefits of tax-deferred or tax-free distributions in retirement. If you need the immediate deduction–and you qualify for it–then you may wish to opt for a traditional IRA. If you don’t qualify for the deduction, then it is almost certainly a better idea to fund a Roth IRA.
Deductibility Guidelines
Your ability to deduct contributions to a traditional IRA is affected by whether you are covered by a workplace retirement plan and your income level. If you are covered by a retirement plan at work, your deduction for contributions made to a traditional IRA in 2014 will be reduced (phased out) if your modified adjusted gross income (MAGI) in 2014 was:

  • Between $96,000 and $116,000 for a married couple filing a joint return.
  • Between $60,000 and $70,000 for a single individual or head of household.
  • If your MAGI was higher than the phase-out ceilings listed above for your filing status, then you cannot claim the deduction.

Note that the deductibility phase-out ranges for the 2015 tax year are:

  • Between $98,000 and $118,000 for a married couple filing a joint return.
  • Between $61,000 and $71,000 for a single individual or head of household.

Should You Convert to a Roth?
The IRS allows you to “convert”–or change the designation of–a traditional IRA to a Roth IRA regardless of your income level. As part of the conversion, you must pay taxes on any investment growth in–and on the amount of any deductible contributions previously made to–the traditional IRA. The withdrawal from your traditional IRA will not affect your eligibility for a Roth IRA or trigger the 10% penalty normally imposed on early withdrawals.
The decision to convert or not ultimately depends on your timing and tax status. If you are near retirement and find yourself in the top income tax bracket this year, now may not be the time to convert. On the other hand, if your income is unusually low and you still have many years to retirement, you may want to convert.
Maximize Contributions
If possible, try to contribute the maximum amount allowed by the IRS: $5,500 per individual, plus an additional $1,000 in catch-up contributions for those aged 50 and older. These amounts pertain to tax-year 2014 as well as tax-year 2015.
Of course, not everyone can afford to contribute the maximum to an IRA, especially if they are also contributing to an employer-sponsored retirement plan. If your workplace retirement plan offers an employer’s matching contribution, then that “free” money may be more valuable than the amount of any deduction you may be able to claim. As a result, it might make sense to maximize plan contributions first, and then try to maximize IRA contributions.
Review Distribution Strategies
If you are ready to start making withdrawals from an IRA, you will need to choose which distribution strategy to use: a lump-sum distribution, required minimum distribution or periodic distribution.
Keep in mind that your distribution strategy may have significant tax time implications if you own a traditional IRA, because taxes will be due at the time of withdrawal. Be sure to consult with your financial and/or tax advisor about the tax ramifications of the various distribution methods before selecting a distribution strategy.
April 15 is never that far away–so don’t hesitate to use the remaining time between now and then to shore up the IRA strategies you will rely on to help support you in retirement.
1Early withdrawals (before age 59½) from a traditional IRA may be subject to an additional 10% penalty tax. Early and other nonqualified withdrawals from a Roth IRA may be subject to taxation as well as the 10% penalty.

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