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Last Minute IRA Contributions to Reduce Income Tax

Posted by on Mar 15, 2016 | Comments Off on Last Minute IRA Contributions to Reduce Income Tax

Last Minute IRA Contributions to Reduce Income Tax

Did you think that the window of opportunity was closed for 2015 tax planning? It’s not too late! If you have not already done so, making a 2015 contribution to your retirement account is an excellent way to reduce your income tax. Contributions must be made by April 18, 2016, in order to receive a deduction on an individual’s 2015 tax return. In addition to providing an immediate tax deduction, contributing to a traditional IRA also provides a tax-deferred method to save for retirement. The amount that can be contributed to an IRA depends on an individual’s age. Everyone can contribute up to $5,500, while individuals age 50 or older are entitled to make an additional $1,000 “catch-up contribution,” which results in a total contribution of $6,500. In addition, it’s not too early to make a contribution for 2016 and get a head start on tax-deferred retirement saving. The contribution levels for 2016 will remain at $5,500 and $6,500 (for individuals age 50 and over). Please note that the amount that can be contributed and deducted may also be affected by participation in other retirement...

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Extension for MD Fourth Quarter Withholding

Posted by on Feb 2, 2016 | Comments Off on Extension for MD Fourth Quarter Withholding

Extension for MD Fourth Quarter Withholding

Comptroller Peter Franchot announced on January 29th that the deadline for the Maryland quarterly withholding for the fourth quarter of 2015, has been extended to February 12th in an effort to alleviate pressure from small businesses that experience setbacks in their operations due to the blizzard. Please note this extension is applicable to Maryland filings only; Federal returns were still due at the end of January. Please call your Hertzbach Tax Advisor with any questions or concerns at 410-363-3200 or 800-899-3633. We look forward to speaking with...

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IRS Issues Update on Identity Theft PINs

Posted by on Jan 14, 2016 | Comments Off on IRS Issues Update on Identity Theft PINs

IRS Issues Update on Identity Theft PINs

The IRS has recently started to mail taxpayers who are victims of identity theft their Identity Theft PINs for use when filing their 2015 tax returns.  The IRS posted an alert on their website that states the CP 01A Notice (dated January 4, 2016) mailed to taxpayers with their PINs provides the wrong tax year. The Notice indicates the IP PIN is for the 2014 tax year.  The IRS has acknowledged the error and has indicated this IP PIN should be used when filing the 2015 return. For more information including answers to some frequently asked questions, please see the link to the IRS alert below....

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Covering Children Tuition Costs with Capital Gains

Posted by on Dec 21, 2015 | Comments Off on Covering Children Tuition Costs with Capital Gains

Covering Children Tuition Costs with Capital Gains

Many parents may find themselves in a position where they must sell investments to pay for a child’s college tuition. These investments could have appreciated over the years, generating capital gains tax in the year that the investments are sold. However, if these funds are shifted to a child attending college, there is a tax strategy that can significantly lower or possibly eliminate any tax due. The Strategy: Prior to the child attending college, parents would gift appreciated investments to the child to hold allowing the investments to further grow. Once the child starts attending college, he or she would then sell the investments and use the money to pay for tuition themselves. This would allow the child to pay for tuition and open doors on their personal income tax return. First, the child is now providing over 50% of their own support allowing them to claim themselves as a dependent. By doing this, it allows them to claim a personal exemption on their own tax return reducing taxable income (capital gain income from investments). Second, the child benefits from the full standard deduction further reducing taxable income. If a child were claimed as a dependent on their parents return, the standard deduction has the possibility of being limited. By a child being able to claim themselves, it ensures the full standard deduction is allowed. Lastly and most beneficial, the child is allowed to claim the American Opportunity Tax Credit allowing up to $2,500 of income tax to be removed. Looking at the possibilities, a child could generate up to $28,000 in long-term capital gain income with the possibility of wiping out any income tax due. Using this strategy allows the parents to sell appreciated investments with no tax liability which may have needed to be sold anyway to pay for their child’s tuition. Please call your Hertzbach Tax Advisor with any questions or concerns at 800-899-3633. We look forward to speaking with...

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Tax Provisions in the FAST Act

Posted by on Dec 10, 2015 | Comments Off on Tax Provisions in the FAST Act

Tax Provisions in the FAST Act

The President signed the Fixing America’s Surface Transportation Act (The Act) into law on December 4, 2015. The bill extends spending authorization from the highway trust fund and other related funds while also containing two noteworthy tax provisions. The Act allows the State Department to revoke or deny passports to individuals without social security numbers or with “seriously delinquent” tax debts.  A seriously delinquent tax debt is one that exceeds $50,000 (adjusted for inflation after 2016) and for which a notice of lien has been filed. Three exceptions apply: The individual is already under an installment agreement to pay their tax due Collection is suspended pending a due process hearing The individual has requested innocent spouse relief The second noteworthy tax provision in The Act is the repeal of the 3 ½ month automatic extension for filing Form 5500, “Annual Return/Report of Employee Benefit Plan” recently created by the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 earlier this year effective for returns with tax years beginning after December 31, 2015.  The automatic extension for filing this form is restored to 2 ½ months. Please call your Hertzbach Tax Advisor with any questions or concerns at 800-899-3633. We look forward to speaking with...

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2015 Year-End Tax Planning Letters for Businesses and Individuals

Posted by on Dec 3, 2015 | Comments Off on 2015 Year-End Tax Planning Letters for Businesses and Individuals

2015 Year-End Tax Planning Letters for Businesses and Individuals

  BDO has shared their annual Tax Planning Letters for Business and Individuals. See below for links to each of the letters. As an independent member of the BDO Alliance USA, Hertzbach has access to the resources of BDO USA, LLP. To read more about our membership in the BDO Alliance USA, click here. Please call your Hertzbach Tax Advisor with any questions or concerns at 800-899-3633. We look forward to speaking with you. 2015 Tax Letter for Individuals 2015 Tax Letter for...

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Nonprofit Financial Statements are becoming clearer…soon.

Posted by on Nov 12, 2015 | Comments Off on Nonprofit Financial Statements are becoming clearer…soon.

Nonprofit Financial Statements are becoming clearer…soon.

Users of the financial statements of nonprofit organizations are sometimes confused as to the true financial position and performance, and how that translates into the achievement of a mission. Nonprofit net asset reporting has always been one of the primary causes of that confusion, particularly to the reader more familiar with standard business focused financial statements. In April 2015, the Financial Accounting Standards Board (FASB), issued an exposure draft of an Accounting Standards Update (Standard) that would potentially redesign the presentation of financial statements for all types of nonprofits. This “refresh”. also includes two changes in recognition standards, related to donor-imposed capital restrictions and underwater endowments losses net asset classification. However, in general, the current methodology in which nonprofits recognize revenues or expenses will not change, though the presentation will indeed be different while also permitting some reporting customization. The FASB has now split the project into two workstreams. One; to reconsider issues that are independent of other FASB projects that are current, in­process, or contemplated, and are changes that might be finalized on a fast-track. The other; to look at changes that are likely to require a longer time and perhaps greater effort to implement. The most fundamental proposed modification in the near-term workstream would be the change to the current net asset reporting scheme, which eliminates the distinction between temporarily restricted and permanently restricted net assets. The current three net asset classes would become only two net asset classes, differentiated by being with or without donor-imposed restrictions. Temporary versus permanent restrictions become less important, and are replaced by an emphasis on differences in the type of restriction and the criteria for the net assets to be utilized. This simpler presentation of restricted net assets will go some way to reducing complexity on the face of the statements of financial position and activities and help the reader understand the net asset position. Another helpful clarification will be the revised naming scheme to define that restrictions are only those that are donor imposed. The new label of “net assets with donor restrictions”is simpler than the old “temporarily restricted” and “permanently restricted”. The nature and amounts of donor-imposed restrictions pertaining to their net assets and the conditions required by to satisfy such restrictions, will still all require disclosure. Board-designated net assets without donor restrictions, including those earmarked for specific future programmatic expenditures, will also be a required disclosure, which generally goes beyond current requirements. Another proposed change is that a deficit related to an underwater endowment account will be charged to net assets with donor restrictions, rather than reducing unrestricted net assets. Currently, when the fair value of an individual donor-restricted endowment fund is less than the original donated amount required to be maintained by the donor or by law, the resultant loss is charged to unrestricted net assets. Disclosures will be required of the board’s policy on spending from underwater endowment funds, the original gift amount or level required by law/donor stipulations to be maintained, as well as fair value. Investment return and expenses are also considered under the Net Assets Classification section of the near-term workstream. This proposal would require a net presentation of external and direct internal investment expenses against investment return on the statement of activities. It would not be required to disclose the components of...

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IRS Continues to Warn Taxpayers from Scammers

Posted by on Oct 29, 2015 | Comments Off on IRS Continues to Warn Taxpayers from Scammers

IRS Continues to Warn Taxpayers from Scammers

The IRS continues to warn taxpayers about scammers claiming to be IRS agents.  The scams takes place in various forms, and often target senior citizens.  Among the tactics used by these scammers are unsolicited telephone calls and phishing emails.  Scammers will call unsuspecting victims and intimidate them into paying fake “tax liabilities” by threatening to suspend the victim’s driver’s license or even jail time.  In recent years, scammers have gotten more creative by forging the caller ID to make it look as if the IRS is truly calling or sending fraudulent emails using IRS letterheads.  Since October 2013, IRS scams have cost victims more than $23,000,000. To help protect oneself from these scams, keep in mind the following: The IRS never initiates contact via phone call or email.  It will always be done via mail.  The IRS will never demand immediate payment or require a specific payment method; a taxpayer always has the right to appeal or to inquire about their tax liability.  Finally, the IRS will never threaten arrest for not paying the liability upfront. Please call your Hertzbach Tax Advisor with any questions or concerns at 410-363-3200 or 800-899-3633. We look forward to speaking with...

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Hertzbach at the 2015 HAND Annual Meeting

Posted by on Jun 23, 2015 | 0 comments

Hertzbach at the 2015 HAND Annual Meeting

Hertzbach’s Affordable Housing Team had a blast at the HAND Annual Meeting today! Hertzbach has over 35 years of experience serving the needs of the affordable housing community. Our firm is staffed by a highly skilled team of professionals who are dedicated to understanding of the unique accounting needs of the affordable housing industry. Contact us today at AffordableHousing@hertzbach.com to find out how we can assist you with our services and...

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Supreme Court Rules in Favor of Wynne:

Posted by on May 18, 2015 | 0 comments

Supreme Court Rules in Favor of Wynne:

Maryland Taxpayers to Begin Receiving Refunds on Previously Disallowed Out-of State Income Tax Credits The Supreme Court ruled against a Maryland law that disallowed a full credit to residents on the income taxes paid to other states. Maryland previously allowed a credit on income that was earned and taxed in another state, but the credit was only allowed to be claimed against Maryland state income tax and not against the local tax to counties.  The Supreme Court Justices, in a 5-4 decision, ruled that it was unconstitutional for Maryland to tax resident income that was earned elsewhere and already taxed because it interferes with the interstate commerce clause of the Constitution. For the past several years as the Wynne case made its way through the court system, many Maryland taxpayers have filed protective refund claims for the credit for taxes paid to other states against their local tax. Now that the Supreme Court has ruled in favor of Maryland taxpayers, these claims will be refunded along with interest at 3%. Hertzbach will be monitoring the situation and will post new information as it becomes available, including information on how refunds will be issued and how to file returns going forward to apply the new provision. If you have any questions, please call your Hertzbach Tax Advisor at 410-363-3200 or 800-899-3633. We look forward to speaking with...

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