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What is a Long Term Capital Gain?

Imagine this scenario. You purchased a block of stock shares with the intent of holding those shares as a long term investment. To your good fortune, the market spikes up sharply. You have made a good profit on the investment and you sell it. You come in to have your tax return prepared. You are very happy because you are quick to tell me that you made sure that you had met the long term holding period. You planned the sale to qualify as a long term sale and therefore you would get the very favorable long term capital gain tax rates. You even brought in the confirmations showing the exact date of purchase and the date of sale. The purchase confirmation showed the purchase date to be August 15, 2014. The sale confirmation showed the sale date to be August 16, 2015. You are very happy since you had owned the stock for more than one year – or so you thought. The rest of our meeting was not very pleasant and you discovered you actually had not held the stock long enough to qualify for a long term gain. (more…)

Posted in: Stocks

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Education Tax Credits

September brings the start of a new college term and again for 2015, the good news for education is that the two federal tax credits for college education expenses remain in place and available to us.

 

The American Opportunity Tax Credit (AOTC) is available for a student during their first four years of college. It is an annual tax credit which can be as high as $2,500 per year per student. The credit is available to anyone in your family during their first four years of college. A portion of this credit may be “refundable” which means that even though your tax liability may be zero, a refund check may still be available. (more…)

Posted in: Tax Credits

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Upcoming Changes In Tax Return Filing Due Dates

On July 31, 2015, President Obama signed into law the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015. Included in this law is a requirement to change the tax return filing date of businesses operating as Partnerships and as “C” corporations beginning with the 2016 reporting year. Although this change is still 18 months away, we must begin to prepare for it now. This is an unprecedented change. (more…)

Posted in: Tax Returns

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IRS Data Breach Alert

THIS IS NOT TO SCARE YOU OR CAUSE YOU UNNECESSARY WORRY OR CONCERN BUT TO MAKE YOU AWARE OF AN IRS ISSUE.

On May 27, 2015, the IRS announced that they had recently discovered a data breach where information on approximately 104,000 taxpayers had been accessed without authorization. The unauthorized accessed was gained through the IRS online “Get Transcript” program. This program while not producing a copy of the tax return, allows the taxpayer to get line-by-line information going back 5 or more years. In order for a hacker to break in and get this information, they would have already had to have access to information such as your social security number, matching name, address, and other personal information. Otherwise, the hacker would not have enough information to access your account in the IRS system. (more…)

Posted in: IRS

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Turning age 70 ½ years old – your one and only opportunity to delay taking your required minimum distribution.

If you were born between July 1, 1944 and June 30, 1945, you will reach the magical age of 70 ½ years old in 2015 and will have to deal with the required minimum distribution rules from your traditional IRA account. However, you have an option. Technically, the rules state that you must begin taking your required minimum distributions on or before April 1 of the year following the year you turn age 70 ½ years old. Translated, this means that you must start taking your required minimum distributions from your IRA by April 1, 2016. (more…)

Posted in: Retirement Planning

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2015 Social Security Payroll Tax Rates

On October 23, 2014, the Social Security Administration announced that effective January 1, 2015, there will be changes in the FICA and Medicare payroll tax rates. Make sure that you revise your payroll software and/or adjust your calculations to cover the change in the 2015 amounts. The beauty for 2015 is that there is NO change in the percentages. (more…)

Posted in: Social Security Payroll Tax Rates

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Beneficiaries – Your Obligation To Monitor

When you purchase a life insurance policy, write your will, or set up an IRA retirement account, you go through the process of naming a beneficiary to the account. It is on your mind and part of the process to set up the account and you take care of it. Hopefully, you have also named a contingent beneficiary in the event the first named beneficiary predeceases you. But time passes us all by and things change. Life changes with births and deaths and also with marriages and divorces. It may have literally been years since you looked at your documents and considered if your named beneficiaries are still fitting your needs and purposes.

I often ask “do you positively know, for sure, beyond any doubt, who are the primary and contingent beneficiaries of your IRA account?” I asked this question the other day and I could tell there was clearly a pause of uncertainty. What brought about this discussion was that a semi forgotten IRA account that had not been thought about for quite a few years had raised its head. (By quite a few years, I mean enough years had passed that he a gotten married, had a child who was now a teenager, was now divorced from the teenager’s mother, and has remarried.) Obviously, a large block of time has passed. (more…)

Posted in: Retirement and Estate Planning

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