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NOTICE TO RESIDENTS OF MARYLAND

We are NOT affiliated with the State of Maryland. If you are looking for information about Maryland income taxes, please go to www.marylandtaxes.com.


Useful Links:

FindAGoodCPA.com - Not a healthcare professional? Find a CPA or EA who understands the tax issues specific to you.

Nanny Taxes - Find out what's involved with complying with the Nanny Tax Rules

IRS Web Site - for tax forms, publications, and general tax information.

Exchange Authority - New England's first authority for IRC 1031 Exchanges

Cost Segregation Studies - Accelerate tax depreciation deductions on new and existing buildings through cost segregation studies

Social Security - find out the latest rules or your projected retirement benefit.

The Company Corporation offers fast, reliable & affordable incorporation and LLC services.


MONTHLY TAX NEWSLETTER

July 2017

OVER 50? YOUR SAVINGS OPPORTUNITIES GET BETTER WITH AGE

by Andrew D. Schwartz CPA

Wisdom isn’t the only benefit you get with age. Starting on January 1st of the year you turn 50, you can make additional “catch-up” contributions towards your tax-advantaged, creditor protected retirement accounts:
  • Additional salary deferrals of up to $6,000 into your 401(k), 403(b), governmental 457(b), or Solo 401k
  • Additional salary deferrals of up to $3,000 into your SIMPLE IRA or SIMPLE 401(k)
  • Contributions of up to $1,000 more into traditional or Roth IRAs

These catch-up contributions are ON TOP OF the standard limits everyone is allowed to contribute in 2017:

  • Salary deferrals of up to $18,000 for 401(k), 403(b), SARSEPs, or governmental 457(b)

  • Salary deferrals of up to $12,500 for SIMPLE IRA or SIMPLE 401(k)

  • Contributions of up to $5,500 for traditional or Roth IRAs

Remember: it’s never too late to save additional money towards your retirement. Even a small increase towards your savings made with each paycheck will make a positive impact to your nest egg when you’re a retiree.

Plus, contributing to a retirement account is one of the best tax shelters available to taxpayers during their working years.  And in this litigious society that we live in, it's great to know that money within your retirement accounts is generally fully protected from your creditors.

H.S.A.s

For older taxpayers, the year you turn 55 you can also contribute an extra $1,000 into your Health Savings Account (HSA) over and above the current limits of:

  • $3,400 for Self coverage

  • $6,750 for Family coverage

Married couples who will both be 55 or older by December 31st can each contribute $1k more into their H.S.A. account, but both spouses need their own account set up to be able to put away this extra money.

With a health savings account, money contributed is tax-deductible, money withdrawn to pay your family's healthcare costs is tax-free, money within the account grows tax-deferred, and any money remaining in the H.S.A. when you turn 65 is available to be withdrawn penalty-free to supplement your retirement income. 

HSA's are like IRAs for your healthcare.   And as health insurance premiums continue to increase, opting for a high-deductible plan that allows you to set up a Health Savings Account becomes more and more attractive each and every year.

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ANDREW SCHWARTZ CPA RECENTLY SPOKE AT THIS YEAR'S NEGASC CONFERENCE

Andrew Schwartz CPA was pleased to have spoken at this year's New England Graduate Accounting Studies Conference, Inc. (NEGASC).  This year's conference, NEGASC 2017,  was held at the University of St. Joseph, located in West Hartford, CT, from June 20 through 23, 2017.  

 

Andrew's presentation was on building a Niche accounting firm.  Over the past 30 years, Andrew has focused his CPA firm on the tax, accounting, and basic financial planning issues affecting healthcare professionals and their practices.  With the help of his brother Rick, their firm has grown to 20 staff members preparing personal taxes for a few thousand physicians, dentists, and psychologists each winter while also providing accounting, tax and payroll services to more than 250 dental and medical practices throughout the year.

 

The New England Graduate Accounting Studies Conference, Inc. (NEGASC) is an independent organization, run largely by non-paid volunteers. Its mission is to provide high quality and affordable professional learning to the US accounting profession through its annual conference.  NEGASC is not affiliated with, nor endorsed by, the Internal Revenue Service, any Federal or State agency, the American Institute of Certified Public Accountants, or any State society of CPAs.

 

The New England Graduate Accounting Studies Conference is among the oldest non-profit organizations set up to further CPA knowledge and education.  It’s does this by holding an annual conference, in which twenty (20) hours of continuing professional education (CPE) are offered.  The location of the annual seminar changes every year, but is held at a college or university in one of the New England states every June. 

 

"Sleeping in the dorms, eating in the dining hall, and attending classes at this beautiful University campus brought back a lot of memories from my college years and added a lot to this unique continuing education experience," says Schwartz. 

 

Next year's conference will be held a half-hour north of Portland Maine during the second half of the second week of June.

BEST DEPRECIATION JOKE

Andrew was happy that the attendees seemed to enjoy his very funny depreciation joke that you can hear at:

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IRS WITHHOLDING CALCULATOR

Many healthcare professionals are employed based on the academic calendar, and therefore, switch jobs or employers around July 1st.  No matter when you change jobs, you need to submit a W-4 form with your new employer to determine how much taxes will be withheld from each paycheck.

There are definitely some major flaws associated with completing a W-4 form.  What seems like a very straightforward exercise in paperwork can often result in a surprisingly large overpayment or balance due when you file your taxes the following winter.

Here are a few of the underlying issues with the W-4 form:

  • If you work for more than one employer, each employer withholds taxes as if they are your only employer.  Let's say you work for 3 employers and earn $20k per employer.  In that situation, you will have significantly less taxes withheld than if you were to work for one employer and earn $60k.

  • If you claim "married" on the W-4, each of your employers will withhold taxes from your salary as if your spouse does NOT work. And the closer your income is to your spouse's income, the more money you might owe with your tax returns if you both claim Married with a few allowances on your respective W-4s.

Fortunately, our friends at the IRS have created an online tool known as the IRS Withholding Calculator to help you complete the W-4 in such a way that you should come close to breaking even on your taxes.  According to the IRS:

If you are an employee, the Withholding Calculator can help you determine whether you need to give your employer a new Form W-4, Employee's Withholding Allowance Certificate to avoid having too much or too little Federal income tax withheld from your pay. You can use your results from the calculator to help fill out the form.

CAUTION: This Withholding Calculator works for most taxpayers. However, if you owe self-employment tax, alternative minimum tax, or certain Other Taxes; you should use the instructions in Pub 505, Tax Withholding and Estimated Tax.

Tips For Using This Program

  • Have your most recent pay stubs handy.
  • Have your most recent income tax return handy.
  • Estimate values if necessary, remembering that the results will be no more accurate than the input you provide.

Ready to start? Make sure Java scripting is enabled before using this application.

Withholding Calculator Button

To Change Your Withholding:

  1. Use your results from this calculator to help you complete a new Form W-4, Employee's Withholding Allowance Certificate.
  2. Submit the completed Form to your employer as soon as possible.

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TAX AND FINANCIAL PLANNING CALENDAR FOR JULY 2017

Month

Income Taxes

Saving and Investing

 

 

July

  • If you changed jobs, give one of our CPAs a call to discuss filling out new W-4 Forms
  • Now's the time to work through your 2017 income tax projection
  • If your Keogh or Solo 401(k) accounts are worth more than $250,000, or if you have employees in your plan, Form 5500-EZ due by 7/31/17
  • Review, update or create your healthcare proxy.  Need Help?.

 TOP


2016 & 2017 TAX FACTS

  • For 2016, the standard deduction for a single individual is $6,300 and for a married couple is $12,600. A person will benefit by itemizing once allowable deductions exceed the applicable standard deduction. Itemized deductions include state and local income taxes (or sales taxes), real estate taxes, mortgage interest, charitable contributions, and unreimbursed employee business expenses.
  • For 2016, the personal exemption is $4,050. Individuals will claim a personal deduction for themselves, their spouse, and their dependents. 
  • The maximum earnings subject to social security taxes is $127,200 for 2017, up from $118,500 for 2015 and 2016.
  • The standard mileage rate is $.535 per business mile as of January 1, 2017, down from $.54 for 2016.
  • The maximum annual salary deferral into a 401(k) plan or a 403(b) plan is $18,000 in 2015, 2016 and 2017, up from $17.5k in 2014. And if you'll be 50 or older by December 31st, you can contribute an extra $6,000 into your 401(k) or 403(b) account this year.
  • The maximum annual contribution to your IRA is $5,500 for 2014 through 2017. And if you turn 50 by December 31st, you can contribute an extra $1,000 that year. You have until April 15, 2017 to make your 2016 IRA contributions.

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Need Help With Your Nanny Payroll?
 

This Month's Topics

Over 50? Your Savings Opportunities Get Better With Age

Andrew Schwartz CPA Recently Spoke At This Year's NEGASC Conference

IRS Withholding Calculator

The FICA Refund for Medical Residents

2016 & 2017 Tax Facts

Tax and Financial Planning Calendar for July 2017

 

NEWSLETTER ARCHIVES
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WHAT'S NEW WITH THE FICA REFUND?

In a shocking development, the IRS recently announced that they will be honoring the FICA tax refunds submitted by residency programs and individual doctors. The catch is that only FICA taxes paid prior to 4/1/05 qualify.

For more information, go to our April 2010 Newsletter, our January 2009 Newsletter, or our February 2001 Newsletter or read through the IRS' Chief Counsel Advice Memorandum on this issue.

Let's work together to keep current on this hugely valuable tax break. Please post whatever you read or hear regarding this FICA issue on our new Message Board we set up just for this topic.

 

 
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