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Archive for December, 2015

It’s Always Better To Know Your Financial Status

As we come to the close of another year, we first want to wish everyone a very successful 2016. We also want to wish that everyone’s finances are in order, that money is plentiful, and that all goes well for now and forever.

Roll, break me off some...
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Unfortunately, we also know it won’t be this way for everyone. As accountants, one of the things we deal with are those clients who come in at the last minute with their papers and receipts for us to do their taxes, or those who want to request an extension without knowing whether they actually need it or not.

Anxiety is a hard thing to overcome in life. It’s very strong when it comes to looking at one’s finances. There’s an inherent response to fear and anxiety; we try to run away from it, avoid it, and hope it goes away. It might for a short period of time… but eventually if it’s bad or perceived to be bad it catches up with all of us.

We always stand on the side that it’s better to know what one’s financial position is than not know. If it’s good, it alleviates a lot of stress. If it’s bad, knowing as far in advance as possible gives you the opportunity to do something about it.

For instance, something we talked about earlier this year involved a friend’s corporate taxes and how, if they’d been addressed way earlier than they were, he would have actually come out way ahead of the game instead of owing money to the government. Sometimes running away from trouble causes more trouble.

We talk about budgeting a lot here because if you budget, you know how much money you have, where it’s going, and whether you have enough or need to find ways to generate more. Budgets help a lot of people get out of trouble and also alleviates a lot of stress when people realize just how much money they have.

A couple of years ago we had a post that talked about the IRS’ willingness to work with people who owe money on their federal taxes and how accommodating they can be. In actuality, the same applies to most large creditors. All you need to do is pick up the phone and talk to someone and almost always, the person on the other end is willing to help you out somehow. There’s a great fear of calling customer service over things like this but the reality is that not only are they regular people like us, but they know that things happen and they’re going to do what they can to keep a customer who’s possibly going through a rough patch.

Of course, nothing is ever guaranteed. You could call someone who’s not as accommodating. In that case, you do what you can, learn who you shouldn’t be a consumer with, and move on with life. Things are always better when you feel you have a bit of control over your life and finances rather than being afraid to pick up the phone because it might be a bill collector.

For 2016, we urge everyone to decide to be a more confident person as it relates to their financial status. We’d love to work with anyone who needs or wants our help in figuring things out, and of course when it comes to your taxes. Be strong, be courageous, and be knowledgeable; those are great things to aim for. Happy New Year!
 

Tax Credits & Other Information For 2016

This is a summary of some of the things regarding taxes for 2015 I sent out to my clients by mail as we head into the new year. Some of it only applies to New York state residents while others are federal tax related. This post will be in bullet form:

* New York state’s corporate minimum fixed dollar amount is based on gross receipts. If you need to file an extension it should be filed by the beginning of March to allow time for processing by the state.

* Hopefully you had insurance coverage in 2015. If not, there’s a penalty of $325 if you’re single and as much as $2,000 or more if you’re married with dependent children. Hopefully you’ll receive Form 1095-B which proves you were covered for the year. You’ll only get this form if your company isn’t covering your insurance and you have to report it on your own. We want to clarify that you won’t be paying these amounts; they count as income, and will be taxed along with whatever you earned for the year.

* The Capital Gains tax rate is 20% for taxpayers in the 39.6% tax bracket, 15% for everyone else.

* The 179 Depreciation Deduction (a business deduction for capital equipment and software) has been reduced to $25,000 as of now; this could change before the end of the year.

* The business mileage rate for 2015 is 57.5 cents per mile. Medical and moving is 23 cents and charity is 14 cents.

* If you have kids in college, the American Opportunity Credit is still available up to $2,500. Of that amount, 40% might be refundable up to $1,000. This credit is set to expire in 2017. The Student Loan interest deduction is still limited to $2,500 per year.

* The maximum Earned Income Credit for 3 children is $6,242 and $5,548 for 2 children.

* The following credits or deductions have expired:
Educator Credit $250
Sales tax deduction on Schedule A Itemized instead of state & local income tax
Above the line tuition deduction and related expenses
Mortgage Insurance Premium Interest (MIP)

As we always reiterate, we hope you’ve kept all of your receipts for the year so we can determine just how much you get to deduct to reduce your tax liability.