Mar 092010

Tax season rolls around every year, whether we like it or not, and it’s really best to be prepared for any new tax credits or deductions that have been created since you last filed. In fact, it’s probably a good idea to go ahead and refresh your memory for any good tax tips from prior years as well.

This year, Congress introduced several new tax saving methods in the American Recovery and Reinvestment Act. Here are a couple of highlights:

Homebuyer Tax Credits ~ In addition to a pretty strong buyers market right now in the real estate world, there are some nice home buyer tax credits. First time home buyers can receive a $8,000 credit while those who have been in a home for five years but have bought something new may be able to get a $6,500 tax credit.

Residential Energy Incentives ~  The government is keen to see you go green and they’ve devised a few incentives to push you along. Credits that were set to expire have been extended and the amount of credit you can claim on energy efficient improvements has been raised as well.

Education Tax Credits ~ Perhaps you’ve heard of the Hope Credit, well now that’s been replaced with the American Opportunity credit.  This new and improved credit will extend help to more taxpayers than before and raises the potential credit to $2,500 versus the old $700.

These are just a few of the new tax credits we’ve seen this year.  Take your time and really explore all of the potential tax savings that are now available and you might just be surprised what you can save.

Mar 112008

Purchasing a hybrid vehicle is a great option for many people, especially those looking to save a bit of money on gas. The purchase of a hybrid has also been made a bit easier to swallow by taking advantage of a tax credit from the Federal government to help encourage hybrid use.

The tax credit for a hybrid, however, is not always clear cut. As this article makes clear, there can be some confusion with the credit. The fact is that some buyers might get less of a credit than expected, or possible no tax credit at all. The bottom line is that you ultimately need to “make you sure you get the right paperwork from the car dealer and that you fill out the correct IRS forms.”

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Jan 212008

If you’ve been looking for information on a 1031 exchanges then you might consider the services of Costa Financial Securities, Inc. This company specializes in different tax deferral strategies and this includes 1031 tax exchange property solutions. The basic idea behind a 1031 tax exchange is that you can reduce or relinquish your tax-burdened assets more effectively and efficiently, and you may be able to defer all of the capital gains tax and depreciation recapture tax when you sell certain kinds of property.  If you replace the sold property for a like kind one, you can defer the profit or gain until a later date.

To put this into legalese, the Internal Revenue Code, section 1031 describes it: “No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like kind which is to be held either for productive use in a trade or business or for investment.”

The key for any successful 1031 tax exchange to work right, the transaction must be properly structured.  This is not something you’d want to undertake with the right kind of expert advice.  Costa Financial Securities can work with you in a number of different ways to help guide you through the process or give you the right type of advice so you can effectively use the 1031 exchange. Costa has partnered with leading 1031 exchange professionals and are able to best leverage those relationships to make sure each real estate transaction that can benefit from this tax exchange.

Some of the ways that Costa can help you would be to help you defer all of the capital gains tax and depreciation recapture tax in a real estate transaction, possibly increase your income and capital appreciation, reduce you property management troubles, diversify you real estate portfolio to a better class of asset as well as a more desirable geographical property.  They can also put you in touch with the right qualified tax attorney or accountant, and they can procure a highly trained intermediary who is an expert on 1031 tax exchanges.

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Jan 212008

President Bush announced last week that he was seeking to offer American tax payers some reprieve from their financial woes in he form of a tax rebate. The proposal would look to provide a total plan worth $150 billion and taxpayers could see a rebate check before the end of the year. The proposed amount would equal about $800 per individual or $1600 for couples.

The relief plan comes as an effort to kick-start the economy and is intended to get Americans spending again, something they historically like to do quite well but have recently started to worry with mortgage pains, credit tightening and an overall slowdown in the economy.

This type of relief, however, comes with risks. NPR presents a quick summary of some of the concerns, noting that “some economists warn about potential pitfalls. Once the federal government opens up the floodgates of spending, it may be difficult to rein it in – especially in an election year. Another potential sticking point is that Americans may not spend their rebates. Putting the rebates in savings accounts, for example, would have no stimulating effect.”

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Dec 192007

Congress voted today 352 to 64 to extend the exclusion of the Alternative Minimum Tax for about 21 million taxpayers. This tax, originally enacted in 1969 to make sure “wealthy” American couldn’t avoid paying taxes using tricky loopholes and tax tricks, has now begun to affect people generally considered middle-class to upper middle-class.

If the extension had not been made, taxpayers would have been looking at paying an additional $2,000 or so this year. To permanently correct the problem and still have an Alternative Minimum Tax would require some form of adjustment for inflation so that the tax would only apply to whatever level would be deemed “wealthy”.

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Dec 102007

Donate As the year winds to an end and you start to wrap up your tax moves for the next year, you might want to give some thought to the charities you choose to donate to. You probably already have your favorite charity or two that you consistently give to, and that’s a great way to choose. There might, however, be some charities you hadn’t thought about or heard of yet.

This article gives some ideas on a smart way to pick your charity. It includes a few sites that let you dig a bit deeper into the charities and exactly how your money is put to work. These include sites like, and

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Dec 032007

As the year begins to wind down this month, there are a couple of things you can do to prepare. There are some year-end strategies you can put into place so that you’ll be ready come tax time.

Marketwatch had an interesting article listing five things you can do now, at the end of the year for the best tax planning. These include things such as getting your dependent and health care now, planning your capital gains, retiring and a few more. Definitely best to get yourself ready and make sure you don’t miss out on any thing before the end of the year.

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Dec 122005

Donating money and good is a great way to help out worthy causes while still helping yourself out on your taxes. Car donation is no different. Even though some of the car donation tax laws changed a few years back, this is still a great way to help yourself and others. So if you have an old car and just aren’t quite sure what to do with it, then consider a charitable donation of your vehicle.

As of 2005, the laws for car donation changed. For motor vehicles, boats, and airplanes that are valued at more than $500, things are a bit different than before. The allowable amount of the deduction is now limited to whatever amount the charity sells it for. The charity to which your car donation is made is required to provide you with written acknowledgement of your donation within 30 days of you making it. If the charity provides any false or exaggerated acknowledgement, they can be penalized.

As of the first of January in 2005, when you make a car donation, the tax write off is based on how the charity uses your donated car. If it is sold, you can deduct the gross sale price. If, on the other hand, the charity uses the car for what the new law calls “significant” tax-approved work of charity, you would be able to claim the market value of the vehicle. Again, however, there are stiff penalties for falsified documents.

Some of the charities, despite acknowledging that the old laws had problems, are skeptical of the new car donation laws. Many of these organizations are concerned about what will happen when the tax deduction responsibility is put in the hands of the charities rather than the donors. A group of them actually sent a letter to the Treasury Secretary suggesting that people may be discouraged from donating when they are unaware of their deduction amount. Not being able to weigh the cost to the benefit of donation may discourage some auto donations.

If you do choose to make a car donation, you will find that the process is very easy. Most charities that offer to take your vehicle will have information on line or via phone about it. In many cases, in fact, you can fill out the appropriate forms on line to get the process underway. You also will likely not even have to be home and the vehicle may not even need to be in working condition. Many charities will come and toe your car away if you can simply leave the title under a floor mat along with the key and put it somewhere accessible. As soon as the car is sold, you will receive a document in the mail letting you know how much you can write off of your taxes, legally.

Since many charities rely on donations of all sorts: clothing, cars, money, and even appliances, think about what you are doing when you make an auto donation. By donating your vehicle, you are helping out a worthy cause of your choice. In addition, you are helping yourself out. Sure, the tax laws have changed, but you can still benefit from your donation. The car doesn’t have to run to be eligible, so your write off might still be more than selling it for junk. So feel good about yourself, help your tax line, and get rid of that old junker by donating your car.

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Aug 232005

Home ownership has risen sharply in recent years, and the percentage of Americans who own their own homes is approaching a record seventy percent. Thats a good thing; wed all rather live in our own home than consider the alternatives. The most common method of purchasing a home is by taking out a mortgage. Continue reading »

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Feb 112005

Being prepared for your tax appointment can really pay off in terms of maximizing deductions and minimizing tax as well as lowering fees charged by your preparer! Additionally, you should be able to walk away from your tax appointment with peace of mind that your returns are complete and accurate and maybe even with some tax savings advice that you can really use.

Finding a Preparer

First of all, finding a tax professional to work with is a very important decision. A tax professional is not only a tax preparer, but someone who can provide you with advice on tax issues and assist you with tax planning. You want to find someone who is not only professional and competent, but who is also a good fit for you and your specific needs.

Selecting a preparer solely based on price is not necessarily in your best interest. Preparers who are preparing many returns at lower prices may be more concerned with the quantity of returns prepared than the quality of the returns prepared. Returns that are rushed through may have errors or omissions which you are ultimately responsible for. A thorough, accurate return where deductions have been maximized legitimately should be your primary tax preparation goal.

If possible, it is best to assess your situation and look for a preparer early. This will allow you more time to find a preparer that is a good fit for you and to possibly even take advantage of a tax planning consultation that could save you more money in taxes. Keep in mind that if you wait to call around until tax season (mid-January through mid-April), it may be challenging to find someone who will be willing or able to speak with you over the phone in much detail about your specific situation.

If you find that it is tax season already and you have not decided on the tax professional that you will be using, there are a few ways that you can find out more about some of them without taking up much of their time on the phone. If you have access to the Internet, you can check out websites of local tax professionals to find out more about their businesses, their credentials, and the services that they offer. You can also check with family and friends to get some referrals.

One last point about finding a tax preparer that you really need to know � they are not all the same! Did you know that only a few states require any kind of licensing or registration of preparers? Thus, in most states, just about anyone can open up a tax preparation business. Did you know that they all do not have full-time, year-round hours? This is important in case you have questions or problems after your taxes are prepared. You should do your homework when checking out potential preparers – find out about their licensing/credentials, education, experience, and availability throughout the year. Two professionals that you should consider in your search are Certified Public Accountants (CPAs) and Enrolled Agents (EAs). They each must meet strict criteria to obtain their designations as well as adhere to a strict code of professional ethics and meet annual continuing professional education requirements.

Getting Prepared and Organized

Once you find a preparer that you want to work with, you will want to be well prepared and organized to ensure that you get the most from his/her time and service. Being organized and prepared can reduce not only your tax liability, but your tax preparation fees as well.

Before proceeding with the actual pre-meeting preparation steps and specific items that you should bring to your tax appointment, it should be noted that all preparers do not actually meet with their clients face to face to prepare their returns. Some just have clients drop off or mail their information. Once the returns have been prepared, they mail the returns to their clients or have the clients pick them up. Would you feel comfortable not meeting with your family physician for your child�s annual physical exam? There is so much more you can get out of the tax preparation process by meeting and working with the preparer!

The following are steps that you should take before meeting with your tax preparer:

* Schedule your appointment early. The earlier in the tax season you schedule your appointment, the less likely it will be that your preparer is dealing with many stressed-out, last-minute clients. Additionally, you will be more likely to get an appointment for a day and time that fits well into your schedule.

* Review last year’s return. This will remind you of any tax issues or situations that you will need to discuss with your preparer as well as remind you of items that you will need for your appointment.

* Organize all receipts and paperwork. The �shoebox� or similar method is not the best for your tax appointment, unless you want to pay your preparer to sort, organize, and add up receipts. Have your receipts organized and totaled by category. Have other relevant documents organized by category.

* Gather all tax-related mail that you receive to include pre-printed tax forms, tax booklets, and tax reminder notices. These items often will include information that is helpful to your preparer in regards to your situation. Many tax clients assume that because their preparer uses tax software that there is no need to bring these items to their tax appointment.

* Prepare information on unusual situations. If you have any unique tax situations or liabilities, prepare to discuss them. This includes any past problems you may have had.

* Bring relevant computer data files. If you track your finances with a program such as QuickBooks or Excel, bring the data file(s) with you. Having the data file(s) handy might assist in answering any last minute questions. Call first to make sure the preparer’s office supports your file format.

* Brush up on relevant tax law/tax changes. While this it is not always possible for the non-tax professional to be fully versed on tax law, the more informed you are, the better you will be able to assist in the return preparation process, provide important information, and keep unnecessary questions to a minimum. Visit the IRS website ( and the website for your state department of taxation/revenue � you will most likely be surprised how taxpayer friendly these sites can be.

* Compile your questions into an organized list. Try to avoid asking questions haphazardly/at random during your tax appointment or making multiple phone calls to your preparer in the same manner. This is not an efficient use of your time or your preparer�s.

* Be on time for your appointment. While we are all busy, there is probably no one as pressed for time as a tax preparer during tax season. If you are late, this could take away from the time the preparer can spend with you. It is important to keep in mind that your preparer may have appointments with other clients before and after your appointment. Accordingly, keep in mind that it is possible for your appointment or the one before yours to run a few minutes over the scheduled/allotted time, so be patient.

* Avoid distractions during your tax appointment. Chit chatting with your preparer, cell phones and pagers, and bringing children with you to your tax appointment can create unnecessary distractions for your preparer which could result in unintentional errors on your tax returns. Your preparer needs to be able to fully concentrate on the task at hand.

* Do not delay getting information to your preparer. If after your tax appointment you need to get back with your preparer with additional information, do so immediately so your return is still fresh in your preparer�s mind and to avoid the last minute April 15th rush. Remember, your preparer has many other clients to deal with. Thus, he/she cannot be expected to call to remind you that he/she is still waiting on information from you. You should take responsibility for getting additional information needed to your preparer and for following up in regards to your returns in process.

As for some specific items that you will not want to forget to bring to your appointment:

* Make sure you have all documents related to income. Examples include wage statements (Forms W-2s); pension and retirement income (Forms 1099-R); interest and dividend income (bank statements and reports, Forms 1099-INT, Forms 1099-DIV); self-employed business income; lottery or gambling winnings; Social Security; unemployment compensation; rental income; commissions; and tips.

* Provide documentation of expenses and losses. Examples include self-employed business expenses; lottery or gambling losses; expenses from rentals; medical and dental expenses; unreimbursed employment-related expenses; job-related educational expenses; job search expenses; moving expenses; and child care expenses (to include care provider�s full name, address, and tax ID or Social Security number).

* Provide documentation related to your home. Typically, home ownership provides many great tax benefits. If you buy or sell a home during the year, make sure you bring complete documentation regarding the sale or purchase of a home. Additionally, bring information/statements related to real estate and personal property taxes and mortgage and/or home equity loan interest paid.

* Documentation related to miscellaneous income or debt. Other items to bring documentation on, if applicable, include, but are not limited to: sales of stocks and bonds; state and local tax refunds; alimony paid or received; estimated or foreign taxes paid; and cash and non-cash charitable donations.

* Information on new dependents to be claimed on your tax return or changes to dependents. If you have had a baby, gotten married, have begun supporting a relative, etc., your preparer will need name, Social Security number, and date of birth information (also discussed below). A name change is another example of such information that your preparer will need.

If you are not sure if something has tax implications, bring the related document or information and ask!

Furthermore, if you are a new client to your preparer, you will need the following items/information as well:

* Your prior year tax returns to include relevant supporting items such as Forms W-2s. Not only your Federal return, but also your state and any local returns. There are items on your prior year returns that may carry forward to your current tax returns. Additionally, the returns allow the preparer to better understand your tax situation.

* Full names, Social Security numbers, and dates of birth for all persons that will be included on your tax returns. It is very important that names and Social Security numbers given to your preparer exactly match up with what is on the individual�s Social Security card. Bringing actual Social Security cards to your appointment helps to ensure this. Additionally, dates of birth must be accurate. When such information is not accurate, this can cause your return to be rejected for processing or otherwise cause a delay in processing of your returns.

In addition to the above listed items, your preparer may have some additional required items, such as a valid state issued identification card or driver�s license for each taxpayer.

Remember, even though the preparer bears some responsibility, you are ultimately responsible for your tax return. So finding a great preparer and being prepared and organized will help ensure that you recognize the greatest tax savings possible and that your tax appointment goes smoothly!

Article by Tiffany J. Morisue of

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Feb 072005

We need real tax reform and we need it now. Previous attempts have been made at tax reform, but they have only provided band-aid solutions that have still left us with too many quirks, complication, and read tape. There are several things Congress could do to simply the tax system and benefit the taxpayers and federal budget at the same time. Continue reading »

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Feb 042005

Very few people whom I know are familiar with the benefits of the Roth IRA. It was named for the late Senator William Roth of Rhode Island, who proposed it. It is similar to a traditional IRA except contributions are never tax-deductible. Contributions to traditional IRAs are sometimes deductible or partially deductible, depending on your income and whether or not you have a retirement plan like a 401(k) at work. With Roth IRAs, individuals are limited to incomes of $95,000 ($150,000 for couples) to be eligible for full contribution amounts. Continue reading »

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Feb 032005

Many taxpayers are confused about how long they should keep tax records. The term “tax records” refers to your tax returns and the documents that support the information in the returns. These documents can include receipts, bank statements, 1099s, etc. If you are one of the unlucky few to be audited, these records will be vital to fending off the IRS. Continue reading »

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Jan 212005

While the middle of January may seem a bit early to begin thinking about taxes, 1099-MISC filing deadlines are looming for businesses. Generally speaking, IRS 1099-MISC is the form used to report miscellaneous income that you paid to persons during 2004 in the course of your trade or business. Continue reading »

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