Update on Health Savings Accounts (HSAs) +
Big Deductions for Temporary Work Assignment
savings accounts (HSAs) are now more popular than ever.
According to a recent survey, the number of HSAs has surpassed
21 million, and the accounts now hold about $42.7 billion in
Here's a very tight summary of how the HSA works for you:
Deduct the health insurance cost.
To enable the HSA, your health insurance must be a
high-deductible health insurance policy. Sole proprietors,
partners, and S corporation owners can qualify to deduct this
high deductible insurance on page 1 of Form 1040. (The page 1
Form 1040 deduction does not suffer the 10 percent haircut
that applies to itemized medical deductions.)
Deduct the HSA contribution.
For 2017, you can make a deductible HSA contribution of up to
$3,400 if you have qualifying self only coverage, or up to
$6,750 if you have qualifying family coverage (anything other
than self-only coverage). The deduction for the contribution
is above the line, so it does not suffer from phaseouts and
it's deductible whether you itemize or not.
Tax-deferred earnings. The
monies compound tax deferred (or even tax-free if you withdraw
Withdrawals from your HSA are tax-free when you use the monies
to pay for qualified medical expenses. You can't pay your high
deductible premiums with HSA funds. But once you reach
Medicare age, you can use the withdrawals for Medicare
premiums in addition to other qualified medical expenses.
You can make your HSA work like a traditional IRA after
reaching Medicare age. To make this happen, you just withdraw
funds from the HSA and don't use them for medical expenses.
This triggers the federal income tax but no penalties.
Easily Fixing Depreciation Errors Can Save Thousands in Taxes
Depreciation is such a valuable tax deduction because unlike
most deductions, it doesn't cost you a penny more than what
you've already spent in order to reap the benefits. In fact,
you don't have to spend anything in the current tax year to
claim it (i.e., you could finance the purchase that you are
If you simply didn't claim depreciation on an asset, didn't
know you could take depreciation, or just flat out claimed the
wrong depreciation, correcting depreciation could potentially
save you thousands of dollars on this year's tax return.
Here's some good news on this error: First, you don't have to
pay the IRS user fees (which can vary from around $2,000 to
$10,000), because your depreciation change is going to qualify
as an automatic change that's not subject to user fees.
Second, because you failed to claim your correct depreciation
in prior years, you are going to have what's called a negative
Section 481(a) adjustment (negative for the government, but
positive for you) equal to the total amount of your missed
depreciation. This means you will take all the missed
depreciation in one lump sum in the tax year when you make
your automatic accounting change.
Third, with a bit of tax planning as to the year you make the
automatic change, you can ensure you realize the best possible
tax benefits from your missed depreciation.
To make this change, an eight-page IRS Form 3115 and a
one-to-two-page Section 481(a) adjustment worksheet attachment
must be filled out, in which the dollar adjustment is
calculated and you answer some questions for the IRS about the
One copy of the Form 3115 is then attached, along with the
Section 481(a) worksheet, to your tax return and a duplicate
copy is made to file with another office of the IRS.
With some planning, this missed deduction can turn into your
Big Deductions for Temporary Work Assignment
You may already know you can deduct your away-from-home
overnight travel expenses.
But what tax rules do you need to know if you want to travel,
or need to travel, to an out-of-town business location for an
your travel to and expenses of living in this out-of-town
location are deductible only if this is a temporary work
location, which the IRS defines as a location where you expect
to spend less than one year.
you have to travel away from your tax home. Your tax home is
not your personal home. Your tax home is the location of your
principal place of business.
You can run into these rules when you create a second business
location in a second state.
For example, a business owner who has an operation in
Wisconsin creates a second business location in Florida. One
of the two locations is going to be the principal place of
business. Traveling to and living in the second location is
going to create tax deductions for travel.
If you meet the requirements listed above, you can deduct all
of your out-of-town travel expenses to the extent they were
not reimbursed by your employer.
Turning Your Personal Home into a Rental Property
Are you looking to make some cash by turning your home into a
rental property? Before you simply convert your home into a
rental property, consider one extra step that could add some
tax money to your pockets.
The one-extra-step strategy is to create an S corporation and
then sell your home to the S corporation, which would then
operate as the landlord for the property. With this strategy:
You avoid taxes by using the home-sale profit exclusion of up
to $250,000 ($500,000 for joint returns).
You create an increase in your rental property's depreciable
basis that generates an increase in depreciation deductions.
If you have any questions about these topics, don't hesitate to call. Help is just a phone call away at
SMEED CPA Adds Financial
Services To Help Clients With
Investments & Insurance
often we here at SMEED CPA are asked about financial issues
that impact our clients investments and their portfolios.
We always offered our opinion and suggestions but in order to
help our clients actually execute the changes we suggest,
SMEED has created a Financial Services division.
SMEED Financial Services, Inc. will be able to
work with both individual and business clients on their
investment portfolios and manage assets on their behalf.
SMEED Financial will include Michael Uadiale,
ACA, CPA, CGMA; and Pablo Blanco who has
recently joined SMEED and comes with over 18 years of
financial sales and advising experience with affluent
Watch your inbox and mail boxes for more specific information
on services SMEED Financial Services, Inc will make available
Would You Give Me Your
Feedback & Testimonial
on Our Hotline?
Hello it’s Michael Uadiale, CPA of
SMEED CPA Inc. We’ve just installed a toll-free
number that I would like for you to call and tell me how you
think we are doing as your CPA firm.
Just dial 800-609-9006
extension 3638 and follow the instructions. If we’ve
done a good job please let me know. And if we can
improve on anything, please mention that too.
Us Be Found on
Also as we expand our business,
we find more and more people are using
YELP and Google
to look for us by searching Brentwood accountant or
When they do this we want to
be FOUND on GOOGLE. One way you can help us
is to give us an
ONLINE REVIEW on our Google Maps/Places listing --->
or check us out at our YELP local listing
click here to go to our Google Listing for SMEED CPA and
click on the
YELP link to go there.
Scroll down to the Review area.
On either site it may say: Been here?
Rate and review
You will click on the Rate and
review link and then log in, then
give us a review!
You can choose between 1 and 5
STARS and write in what you think about the tax or accounting
work we have done for you.
It's that simple. Thank
you in advance for your help and cooperation!
As always you can call our offices if you have any
questions about these or any other accounting related issues, at
Regards, Michael Uadiale, CPA,
Managing Partner, SMEED CPA,