Tax Partners Northwest LLC
Your partners in tax

Recent News Updates

Protecting Yourself After the Equifax Hack
9/10/17, 9:11PM

Another day, another information breach.  Ho hum, right?  No.  This one is different.  Equifax estimates that identifying information for 143 million people has been hacked from their website.  Chances are, it includes you.  Even if you went to their website and it says it didn’t affect you, it’s time to start taking steps to protect yourself.

 

In the past, we have advised you to freeze your credit if your identity was stolen.  This time, the information that was stolen is enough that a person could unlock your credit without you knowing.  Those of us with frozen credit aren’t in the habit of checking it, so they could do a lot of damage before you find out.

 

You can notify one credit bureau that you want a fraud alert placed on your account, and they will notify the others.  Here is where to go for Transunion.  https://www.transunion.com/fraud-victim-resource/place-fraud-alert  Here is the site for Experian.  https://www.experian.com/fraud/center.html  We’ll just figure Equifax has done enough damage already and leave them off the list.  Put a reminder on your calendar to do new fraud alerts every 90 days. 

 

I still suggest that you get a free credit report here https://www.annualcreditreport.com/index.action.  You can get one from each of the three credit bureaus every year.  So get one today from one, get one in four months from another, and get another from the third four months after that.  You won’t have to pay anything, and you’ll be monitoring your credit on a consistent basis.

 

If you want to pay someone to do this for you, this is what companies like Lifelock are for.

 

Go here https://www.irs.gov/individuals/get-transcript and create an account for yourself.  Make a note in a safe place of the information you used and your password.  This will stop someone from going in to the IRS records, getting your tax returns and doing mischief with them.

 

Finally, I have set up my bank account so that I receive an alert anytime money is taken out of my checking or savings account, or a charge is made on my credit card.  This was very easy to do online.

 

It’s important to note that you need to be vigilant about all this forever.  Equifax is offering credit monitoring for only one year.  My identity was stolen four years ago, and I still get notices every few months that someone is trying to open credit in my name.  Once your information is out there, you can’t get it back.

 

Irritated that you are caught in this web?  Welcome to the club.  If you visited the Equifax site and it says that you weren’t affected, don’t heave too big a sigh of relief, it’s only a matter of time.  Once you’ve taken the steps above, get another coffee and write an email to your Congressperson letting them know your opinion of the current system.  These credit bureaus collect amazing amounts of information about us, we have no control over what they do with it, and now it turns out they didn’t keep it secure.  It’s not like we can go out and get a new social security number.  It’s time for Congress to take a look at this issue and make some rules to protect us.  Here’s where you can go to find an email address for your member of Congress.  https://www.house.gov/representatives/find/  And here’s where you can find contact information for your senators.  https://www.senate.gov/general/contact_information/senators_cfm.cfm?OrderBy=state&Sort=ASC

 

As always, feel free to call us if you have any questions!

 


What do we do after tax season?
5/3/17, 10:50AM

People ask us all the time what we do after tax season.  Everyone’s filed their returns by April 15, right?  So what are we doing the rest of the time?

 

This is an interesting question, and there is no fixed answer.  First of all, no, not everyone has filed their returns by April 15.  A fair number of people go on extension and we work on those returns during the summer.

 

Some people haven’t filed their tax returns for several years, so we help them get caught up.  If necessary, we can advise them on setting up a payment plan to take care of what they owe.

 

Just as tax season is wrapping up, the IRS sends out a flurry of letters requesting more information about the returns that were filed last year.  These are scary letters and imply that you owe a lot of money.  Usually when we have a chance to review them, we can reduce what you owe.  Sometimes we even get a refund for a new client when we make a correction.  I always want to thank the IRS for calling this to our attention!

 

We help taxpayers who are under audit.  Because we are all CPAs or Enrolled Agents, we can represent a taxpayer so they don’t have to deal with the IRS.  We can speak for you in the Examination, Collection and Appeals departments, and help you work out the most favorable settlement possible.

 

We offer tax planning to new and existing clients.  When something is about to happen that may impact your tax situation next year, why not come in and talk to us beforehand?  Often there are different ways you can handle the same transaction, and one of them might save you a lot of tax money.  Even if you know you’re going to have to pay, we can help you estimate how much, and talk to you about making estimated payments to avoid penalties.

 

In a year like this one, we spend a fair amount of time reviewing the new tax regulations that are being proposed to Congress.  We keep up on this, so we can let you know when something might impact your financial situation.

 

And finally, there’s continuing education.  Each of us is required to take a minimum of between 24 and 40 hours of continuing education each year.  Of course we take more than that, there are so many things to learn and our tax code is continuously changing and evolving.  We want to be sure that we provide you with the best and most up to date information available.

 

The best thing about what we do is that it’s always exciting!


Thinking about an IRA?
4/1/17, 9:01PM

Did you contribute to an Individual Retirement Arrangement last year? Are you thinking about contributing to your IRA now?  Have you done your taxes and aren't happy with your bottom line? If so, you may have questions about IRAs and your taxes. Here are some IRS tax tips about saving for retirement using an IRA.  Contributing to an IRA is one of the only things you can still do today that will affect last year's tax return.

 

Age Rules. You must be under age 70½ at the end of the tax year in order to contribute to a traditional IRA. There is no age limit to contribute to a Roth IRA.

 

Compensation Rules. You must have taxable compensation to contribute to an IRA. This includes income from wages and salaries and net self-employment income. It also includes tips, commissions, bonuses and alimony. If you are married and file a joint tax return, only one spouse needs to have compensation in most cases.

 

When to Contribute. You can contribute to an IRA at any time during the year. To count for 2016, you must contribute by the due date of your tax return. This does not include extensions. This means most people must contribute by April 18, 2017. If you contribute between Jan. 1 and April 18, make sure your plan sponsor applies it to the year you choose (2016 or 2017).

 

Contribution Limits. In general, the most you can contribute to your IRA for 2016 is the smaller of either your taxable compensation for the year or $5,500. If you were age 50 or older at the end of 2016, the maximum you can contribute increases to $6,500. If you contribute more than these limits, an additional tax will apply. The additional tax is six percent of the excess amount contributed that is in your account at the end of the year. 

 

Taxability Rules. You normally don’t pay income tax on funds in your traditional IRA until you start taking distributions from it. Qualified distributions from a Roth IRA are tax-free.

 

Deductibility Rules. You may be able to deduct some or all of your contributions to your traditional IRA.

 

Saver’s Credit. If you contribute to an IRA you may also qualify for the Savers Credit.  It can reduce your taxes up to $2,000 if you file a joint return.

 

Unsure whether you can or should contribute to an IRA?  Call us, we're always happy to help with your tax planning!

 

 


Donate time to charity?
3/20/17, 11:49AM

Did you donate your time to charity last year? If you traveled for it, you may be able to lower your taxes. Here are some tax tips that you should know about deducting charity-related travel expenses:

 

 Qualified Charities.  To deduct your costs, you must volunteer for a qualified charity. Most groups must apply to the IRS to become qualified. Churches and governments are generally qualified, and do not need to apply to the IRS. Ask the group about its status before you donate.

 

Out-of-Pocket Expenses.  You may be able to deduct some of your costs including travel. They must be necessary while you are away from home. All  costs must be:

 

                        Unreimbursed,

                        Directly connected with the services you provide to the charity,

                        Expenses you had only because of the services you gave, and

                        Not personal, living or family expenses. 

 

Genuine and Substantial Duty.  Your charity work has to be real and substantial throughout the trip. You can’t deduct expenses if you only have nominal duties or do not have any duties for significant parts of the trip. 

 

Value of Time or Service.  You can’t deduct the value of your time or services that you give to charity. This includes income lost while you serve as an unpaid volunteer for a qualified charity. 

 

Travel You Can Deduct.  The types of expenses that you may be able to deduct include:

 

                        Air, rail and bus transportation,

                        Car expenses,

                        Lodging costs,  

                        Cost of meals, and

                        Taxi or other transportation costs between the airport or station and your hotel. 

 

                Travel You Can’t Deduct.  Some types of travel do not qualify for a tax deduction. For example, you can’t deduct your costs if  a significant part of the trip involves recreation or a vacation.

 


Ten Facts That You Should Know about Capital Gains and Losses
2/14/17, 11:41PM

When you sell a capital asset the sale results in a capital gain or loss. A capital asset includes most property you own for personal use or own as an investment. Here are ten facts that you should know about capital gains and losses:

 

1. Capital Assets.  Capital assets include property such as your home or car, as well as investment property, such as stocks and bonds.

 

2. Gains and Losses.  A capital gain or loss is the difference between your basis and the amount you get when you sell an asset. Your basis is usually what you paid for the asset.

 

3. Net Investment Income Tax.  You must include all capital gains in your income and you may be subject to the Net Investment Income Tax. This tax applies to certain net investment income of individuals, estates and trusts that have income above statutory threshold amounts. The rate of this tax is 3.8 percent.

 

4. Deductible Losses.  You can deduct capital losses on the sale of investment property. You cannot deduct losses on the sale of property that you hold for personal use.

 

5. Long and Short Term.  Capital gains and losses are either long-term or short-term, depending on how long you held the property. If you held the property for more than one year, your gain or loss is long-term. If you held it one year or less, the gain or loss is short-term.

 

6. Net Capital Gain.  If your gains are more than your losses, the difference between the two is a net capital gain. If your net capital loss is more than your net capital gain, you have a capital loss. 

 

7. Tax Rate.  The capital gains tax rate usually depends on your income. The maximum long term capital gain tax rate is 20 percent. However, for most taxpayers a zero or 15 percent rate will apply. Short term gains are taxed at your regular income tax rate.  

 

8. Limit on Losses.  If you have a capital loss, you can deduct it on your tax return. This loss is limited to $3,000 per year, or $1,500 if you are married and file a separate return. 

 

9. Carryover Losses.  If your total net capital loss is more than the limit you can deduct, you can carry over the losses you are not able to deduct to next year’s tax return. You will treat those losses as if they happened in that next year.

 

10. Forms to File.  You will report your sales of capital assets on form 8949 and Schedule D. 

 

Questions?  Call us!

 


Deducting charitable donations
2/3/17, 8:33PM

When you give a gift to charity, it helps others in need. It may also help you at tax time. You may be able to claim the gift as a deduction that may lower your tax. Here are eight tax tips you should know about deducting your gifts to charity:

 

1. Qualified Charities.  You must donate to a qualified charity if you want to deduct the gift. You can’t deduct gifts to individuals, political organizations or candidates.

 

2. Itemized Deduction.  To deduct your contributions, you must file Form 1040 and itemize deductions on Schedule A.

 

3. Benefit in Return.  If you get something in return for your donation, your deduction is limited. You can only deduct the amount of your gift that is more than the value of what you got in return. Examples of benefits include merchandise, meals, tickets to an event or other goods and services.

 

4. Donated Property.  If you gave property instead of cash, the deduction is usually that item’s fair market value at the time of donation. Fair market value is generally the price you would get if you sold the property on the open market.

 

5. Clothing and Household Items.  Used clothing and household items must be in at least good condition to be deductible in most cases. Special rules apply to cars, boats and other types of property donations.

 

6. Form 8283.  You must file form 8283, Noncash Charitable Contributions, if your deduction for all noncash gifts is more than $500 for the year.

 

7. Records to Keep.  You must keep records to prove the amount of the contributions you made during the year. The kind of records you must keep depends on the amount and type of your donation. For example, you must have a written record of any cash you donate, regardless of the amount, in order to claim a deduction.

 

8. Donations of $250 or More.  To claim a deduction for donated cash or goods of $250 or more, you must have a written statement from the charity. It must show the amount of the donation and a description of any property given. It must also say whether the organization provided any goods or services in exchange for the gift.

 

Still have questions?  Call us!


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