Rebella Accountancy | 507 E. First Street, Suite A | Tustin, CA 92780 | Phone: 714-619-0667 | Fax: 714-544-0236

       

 

 

Monica Rebella, CPA

Rebella Accountancy

 

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Other Articles

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Feature Articles

- Sweeping new IRS 'repair regulations' impact most businesses
- Congress begins work on payroll tax extension as White House unveils new proposals
- IRS launches third version of voluntary offshore disclosure program
- The Saver's Credit: An underused retirement savings benefit
- Using fringe benefits as an income substitute during the economic downturn

How Do I?

- Claim a charitable contribution of property?
- obtain an appraisal for a noncash charitable contribution
- Compute gain in a like-kind exchange when some cash is received
- How do I? Deduct a contribution of clothing or a household item under the new rules?

Frequently Asked Questions

- When do I need to file IRS Form 8938, Statement of Specified Foreign Financial Assets?
- When is the best time of year to contribute to an IRA?
- How does a 60-day loan from an IRA work?
- What if I owe taxes and can't pay the full amount?
- How does the new sales tax deduction for vehicle purchases work?
- How much proof is enough, when contributing used clothing to charity?

 

 

 

Income the IRS Can't Touch


Wouldn't it be nice to have a source of nontaxable income? You may be more fortunate than you realize. Listed here are a number of income items that the IRS does not tax.

1) Tax-Free Interest. Municipal bond interest is federal tax-free. This includes bonds issued by a state or municipality. The tax-free benefit increases the higher your income, but caution must be taken to ensure the underlying municipality is not in dire financial condition.

2) Health Insurance Premiums. For now, health insurance premiums are tax-free. This is scheduled to change in the future to help pay for health care reform, but for now this benefit can be paid in pre-tax dollars.

3) Income from Roth IRA and Roth 401(k) Accounts.

While the amounts contributed to these retirement savings accounts is taxed, any earnings made on these contributions is federal tax-free as long as holding period and distribution rules are followed.

4) Health Related Spending Accounts (HSA).

Contributions and earnings in these health related spending accounts are tax-free as long as the proceeds in the account are used to pay for qualified health care expenses.

5) Child Support Received.

Unlike alimony received, child support income is federal tax-free.

6) Car Pool Revenue.

While commuting expenses are not generally deductible, any reimbursement of your commuting expenses by fellow passengers is not reportable as income.

Click Here To Learn Why When Your Bring Your 2011-2012 Taxes To Us And You’re Entered Into a Drawing For a 50-Inch Large Screen TV!

   

7) Home Sale Gains. Up to $250,000 ($500,000 for married filing jointly) of capital gains on a sale of your principal residence can be tax-free.

8) Certain Employer Compensation. In addition to health care premiums there are a number of employee benefits that are not taxable. All have limits, but every tax-free dollar is money in your pocket. These include:

- airline miles earned on business credit card expenses,
- certain employee provided tuition expenses,
- qualified adoption expense reimbursement,
- up to $50,000 in employer paid term life insurance,
- flex spending accounts for dependent care and health care, and
- commuting expense benefits for parking and mass transit commuting.

Remember any time you can pay for something in pre-tax dollars is like giving yourself a raise. Are you taking advantage of all your federal tax-free income opportunities?  (click here to see this article as a web page)

click here to listen to this video update on:

click here to listen to this video update on:

   

I read an article in SmartMoney magazine recently that I wanted to pass along to you titled: 5 Little-Known Tax Deductions by Bill Bischoff where he talks about it being possible to write off some expenses that were paid for by someone else such as:

  1. Medicare Insurance and Long-Term Care Premiums
  2. Medical Expenses Paid by Someone Else
  3. Real Estate Taxes Paid by Someone Else
  4. Home Mortgage Points Paid by Someone Else
  5. Fees to Charge Taxes to Your Credit Card


      Click here to read the article online.

   

 

Tips to Organize Your Tax Records
Creating order out of Chaos

 

As important tax records start filling mailboxes, how can you make sure your tax preparation goes smoothly and efficiently this year? Here are some tips.

1. Keep it all in one place. It seems obvious, but how often have you found yourself going through piles of paper looking for that elusive missing 1099 tax form or charitable deduction receipt? If you only do one thing, this is it. Granted if all you do is this, you end up with a massive jumble of paper, but it is better than missing something.

2. Time to sort. The best idea here is to sort your information into the same buckets as your tax return. At minimum sort the information into the basic categories. If you have a lot of something, then sort into sub-detail categories. A basic list of the more common items is here for your use.

         
 

Income
- Wages
- Interest Income (1099 INT)
- Social Security
- Alimony
- Dividends (1099 DIV)
- Investments (1099 B)
- Business income (K-1s)
- Winnings (W-2G, 1099 G)
- Other Income Items

 

Income Adjustments
- Student loan interest
- Educator expenses
- IRA contributions
- Tuition & fees deduction
- Moving expenses
- HSA/MSA contributions
- Alimony paid
- Other education expenses

 
 

 

 

 

 
 

Itemized Deductions

- Taxes Paid
- Medical/Dental expenses
- Casualty/Theft losses
- Charitable contributions
- Investor/other expenses
- Unreimbursed employee

   expense
- Interest expense
  > (mortgage/home equity)

 

 

Credit information
- Child & dependent care expense
- Adoption expenses
- Education expenses
- Other credit related expense

Business/Rental
- Sort income and expenses for each business activity or hobby activity or rental unit.

 

3. Not sure bucket. There may be things you receive that you are not certain about needing for tax filing purposes. These items should be gathered in one place for review.

4. Time to sum. Once the information has been categorized, create a summary of the information. This summary can be a printed copy of an organizer or it could be a simple recap you create.

5. Is something missing? Pull out last year’s tax return and create a list of things you needed last year. Use this as checklist against this year’s information. While this process will not identify new items, it will help identify missing items that qualified in prior years.

6. Finalize required documentation. Certain deductions require substantiation and/or logs to qualify your expense. Common areas that require this are: business mileage, charitable mileage, medical mileage, moving mileage, non-cash charitable contributions, and certain business expenses. These logs should be maintained throughout the year, but now is a good time to make sure they are complete and ready to go for tax filing.

With the amazing mix of taxable income items, various deductions, and credits it is very easy to overlook something. Hopefully, by following these tips that risk is greatly reduced.  (click here to see this article as a web page)

To read this & my other articles online go to www.RebellaCPA.com and click on the Newsletter section.

 


 

As always you can call me at 714-619-0667 if you have any questions about investing, retirement or any other tax & accounting related issues. 

 

Regards, Monica Rebella, CPA/IAR

President, Rebella Accountancy

 
Disclaimer:  The opinions contained herein are not intended to be investment advice or a solicitation to buy or sell any securities. With any investment you should carefully consider the investment objectives, potential risks, management fees, and charges and expenses before investing.  Past performance is not a guarantee of future results. The investment return and principle value of any investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.

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Monica Rebella, CPA/IAR | President - Rebella Accountancy | Certified Public Accountants
507 E. First Street, Suite A | Tustin, CA 92780 | Phone: 714-619-0667 | Fax: 714-544-0236
Email: mrebella@rebellacpa.com | www.RebellaCPA.com | www.MyDentalCPA.com