Wednesday, May 28, 2014

Is a business valuation useful? Yes!

Wednesday, May 21, 2014

Planning can save your vacation home tax deductions

You can enjoy a vacation home and cut your taxes - with some careful planning and a little discipline.

The IRS rules can be complex and potentially restrictive, so a word of caution is in order as you plan the use of your vacation home.

Owners of vacation homes often rent out the property when they're not using it themselves. Renting out your vacation home may or may not make sense for you. The principal variables are the number of days you rent the property, the number of days of personal use, your individual tax situation, and your personal wishes for the use of your vacation home.

* Rent for 14 days or less and a simple tax break is available. If you rent your vacation home for 14 days or less, all of the rental income is tax-free. This attractive tax benefit can help provide cash for your mortgage and other expenses.

* Rent for more than 14 days and your tax planning and personal life become more complex. If you rent your vacation home for more than 14 days, all your rental income is reportable. Whether you treat the income and expenses as a second residence or as rental property depends on the personal use of your vacation home relative to the time the home is rented out. This test is made annually and determines the nature of deductions, loss carryovers, and the tax treatment if the vacation home is sold.

Please call us to guide you through the IRS rules to find the rental strategy that meets your financial goals, yet ensures the personal enjoyment of your vacation home.

Monday, May 19, 2014

Consider a disciplined investment strategy

In today's rabbit-fast world, it pays to remember that the tortoise won the race. For investors, dollar-cost averaging - a slow and steady investment plan - can be a winning strategy.

With dollar-cost averaging, you invest a set amount of money on a regular basis, typically in a mutual fund. The idea of investing a fixed dollar amount at regular intervals is simple, but the benefits add up. Here are some advantages offered by dollar-cost averaging:

* Lower average cost. An investing schedule based on a fixed dollar amount lets you buy more shares when prices are low and fewer shares when prices are high. This averaging effect makes the per-share cost of your investment lower than the average market price per share for the same time period.

* Expanded investment options. Coming up with the minimum that some mutual funds typically require to open an account can be difficult. But many funds will waive the minimum initial investment if you sign up for an automatic monthly investment plan.

* Decreased market timing risk. Committing to a plan of dollar-cost averaging takes the guesswork out of when to invest. Once you've decided how much to invest and how often, you make purchases regardless of the direction of the market.

* Disciplined investment. Fixed, automatic payments on a regular schedule provide an easy yet disciplined way to finance your investment goals. Because the amount you invest stays constant, you can more easily budget for it.

Dollar-cost averaging is a disciplined investment strategy. It doesn't eliminate the need to review your investments periodically to make sure that they still meet your expectations and your risk tolerance.

Measured and consistent investing offers long-term benefits. And, like the tortoise, your portfolio can end up the winner.

Friday, May 16, 2014

Nonprofit organizations may have tax obligations

If you're an officer or on the board of a community organization, you may wonder about the tax requirements that apply to your group. Generally, an organization will not owe taxes if two things are true:

* It has registered as an exempt nonprofit organization with the IRS, and

* It has no business income from activities unrelated to its exempt purpose.

Registration is quite straightforward. The IRS grants exempt status to groups organized for charitable or mutual benefit purposes. You must submit your application within the first 15 months of the group's existence. The package consists of an application form, a copy of your Articles of Incorporation or similar document, and a user fee. Some groups, such as churches or those with annual receipts of less than $5,000, don't even have to register to be considered exempt.

More questions arise on the definition of unrelated business income. Generally, you will owe tax on income from any trade or business that is not substantially related to the organization's exempt purpose. Fortunately, the definitions are quite favorable in this area. The business really has to be quite distinct from the primary purpose of the organization before income becomes taxable. For example, a charity doesn't pay tax if it runs a thrift shop and uses the proceeds for its charitable work. Generally, rents from leasing out real property, interest income, and dividends are not subject to tax.

Once it's registered, an exempt organization will have to file an annual information return on Form 990 or 990-EZ unless its yearly gross receipts do not exceed $50,000. Those exempt organizations with receipts of $50,000 or less must still file an annual return electronically on Form 990-N. Just as with a tax return, there are penalties for filing Form 990 or 990-EZ late or failing to file. There is no penalty on an organization that is required to file Form 990-N but fails to do so; however, if an organizations fails to file an annual return for three consecutive years, its exempt status is revoked.

Generally, the filing deadline is the 15th day of the fifth month after the organization's year-end. For 2013 returns, the deadline for calendar-year organizations is May 15, 2014. For assistance with this or any of your tax filings, contact our office.

Wednesday, May 14, 2014

Tips on how to save more for retirement

Need to save more for retirement? Saving money doesn't have to be hard work. In fact, many successful savers have found simple ways to cut spending and increase their savings. Here are some tips to help you get started and stay on track.

* Figure out how much money you need for retirement. The number of years you have before retirement will help determine how much you will need to invest each month to reach your financial goal.

* Be realistic. Make sure that your savings goal is realistic. If your goal works out to 10% to 15% of your monthly income, it should be achievable. But you may need to cut expenses to free up savings.

*Pay yourself first. Try to treat your savings as your most important monthly bill. Write a check to savings first, or have your savings automatically deducted from your checking account or paycheck.

*Track expenses. Another way to maximize savings is to track your expenses for a few months. This is a great way to spot unnecessary or wasteful spending; it doesn't take much work to see potential cutbacks.

*Take control. When it comes to saving, think "control." For example, control the use of your credit cards. The amount you pay each month in finance charges could go to savings instead. Also, control the use of your ATM card. Get in the habit of giving yourself a regular cash allowance, and try to live with it.

The key to having enough money for a comfortable retirement is to become a serious saver. Start saving early, commit to saving regularly, and save as much as you can. No one ever retired regretting that they had accumulated too large a retirement fund.

Monday, May 12, 2014

How important are good tax records?

Friday, May 9, 2014

Health insurance credit increases for 2014

Wednesday, May 7, 2014

New limit on IRA rollovers

Monday, May 5, 2014

Your tax refund could be offset by debts

Friday, May 2, 2014

Prepare, prepare, prepare if you want to get your bank loan

Getting a bank loan for your business may be more difficult than usual in today's troubled economy. However, if you give your bank a thorough, organized, and well-supported loan proposal, you'll increase your chances of getting the money your business needs.

* Apply early. Applying early shows that you're planning, not reacting. Also, if you wait until the last minute, you're likely to leave out necessary information.

* Prepare a loan proposal. Many small businesses, especially first-time borrowers, fail to prepare a formal loan proposal. This is a mistake. The loan proposal, together with cover letter and supporting documentation, gives you a chance to explain your request clearly and thoroughly.

* Give the bank what it needs to know. Be prepared to present detailed, well-supported answers to the following questions: How much money do you need? For what purpose? How long do you need it? How will you repay it? What collateral are you willing to put up, and how much is it worth?

* Include all essential documents. With respect to your business, you'll probably need at least the last three annual financial reports and tax returns, the most recent interim report, and a recent aging schedule for accounts receivable. You may also have to provide personal information, including a current personal financial statement and your last three tax returns. For business equipment and real estate, you may have to provide a recent appraisal.

* Give bad news as well as good. Your personal character is the most important nonfinancial part of your loan proposal. Increase your credibility by revealing your financial skeletons, if any, ahead of time.

If you do your homework and prepare thoroughly, you're more likely to obtain the money you need. Contact us for assistance in preparing your loan proposal.

Have you checked your withholding lately?