by The MDTAXES Network | Nov 17, 2015 | 2015 Year End Newsletter, Uncategorized
From IRS Tax Tips Bulletin:
The IRS provides the following tax scam warnings so you can protect yourself and avoid becoming a victim of these crimes:
- Be vigilant of any unexpected communication purportedly from the IRS at the start of tax season.
- Don?t fall for phone and phishing email scams that use the IRS as a lure. Thieves often pose as the IRS using a bogus refund scheme or warnings to pay past-due taxes.
- The IRS doesn?t initiate contact with taxpayers by email to request personal or financial information. This includes any type of e-communication, such as text messages and social media channels.
- The IRS doesn?t ask for PINs, passwords or similar confidential information for credit card, bank or other accounts.
- If you get an unexpected email, don?t open any attachments or click on any links contained in the message. Instead, forward the email to phishing@irs.gov. For more about how to report phishing scams involving the IRS visit the genuine IRS website, IRS.gov.
Here are several steps you can take to help protect yourself against scams and identity theft:
- Don?t carry your Social Security card or any documents that include your Social Security number or Individual Taxpayer Identification Number.
- Don?t give a business your SSN or ITIN just because they ask. Give it only when required.
- Protect your financial information.
- Check your credit report every 12 months.
- Secure personal information in your home.
- Protect your personal computers by using firewalls and anti-spam/virus software, updating security patches and changing passwords for Internet accounts.
- Don?t give personal information over the phone, through the mail or on the Internet unless you have initiated the contact and are sure of the recipient.
For more on this topic, see the special identity theft section on IRS.gov. Also check out IRS Fact Sheet 2014-1, IRS Combats Identity Theft and Refund Fraud on Many Fronts.
IRS YouTube Videos:
IRS Podcasts
by The MDTAXES Network | Nov 17, 2015 | 2015 Year End Newsletter, Deductions
According to the IRS, to be deductible, an expenditure must be both “ordinary” and “necessary” in connection with your profession.? The IRS defines “ordinary” as common and accepted in a particular profession and “necessary” as helpful and appropriate for a particular profession.
Here?s a list of 16 professional expenditures commonly incurred by young health care professionals:
-
Automobile expenses
-
Beepers and pagers
-
Books/library
-
Cellular telephones?
-
Computer purchases
-
Education, examinations & licenses
-
Equipment & instruments
-
Job search
-
Malpractice insurance
-
Meals & entertainment
-
Parking & tolls
-
Professional dues, journals & subscriptions
-
Psychoanalysis as part of training
-
Supplies
-
?Travel & lodging
-
Uniforms & cleaning
?Please note:? Employees may not deduct professional expenses that are eligible for reimbursement from their employer.
by The MDTAXES Network | Nov 17, 2015 | 2015 Year End Newsletter
On October 21st, the IRS announced the cost of living adjustments applicable to the various retirement plan limitations for 2016.? Unfortunately, the bulk of the?retirement savings limits will not increase from 2015.
No Increases for 2016
Most working professionals have access to a 401(k) plan or a 403(b) plan at work.? Amounts contributed to these plans generally reduce your taxable earnings and always grow tax deferred.? Like 2015, you can contribute up to $18,000 into a 401(k) or 403(b) plan through salary deferrals in 2016.
Anyone 50 or older by December 31, 2016 can contribute an extra $6,000 into their 401(k) or 403(b) plan through salary deferrals next year, for a total annual contribution of $24,000.? That is the same as what was allowed during 2015.
Many smaller employers offer their staff access to SIMPLE/IRAs instead.? SIMPLE’s work just like 401(k) plans, which means it’s up to you to fund the bulk of this retirement savings account through salary deferrals.? For 2016, the maximum contribution into your SIMPLE remains at $12,500.? Anyone 50 or older by December 31st can sock away an additional $3,000 in 2016, for a total annual contribution of $15,500, unchanged from 2015.
And if you are self-employed,?you can contribute up to 20% of your net self-employment income into a SEP IRA.? The maximum contribution into your SEP IRA for 2016 remains the same at $53,000.
Re-Set Your 2016 Budget
Most people won’t be able to max out these tax-advantaged retirement options unless they get on a budget and put away a set amount of money each month.? With 2015 winding down, now’s the time to start thinking about resetting your monthly retirement savings goals for 2016.
2016 Maximum Retirement Account Contributions
Under the Age of 50:
|
401(k) or 403(b) |
$18,000
($1,500/month) |
|
SIMPLE IRA |
$12,500
($1,041.67/month) |
|
SEP IRA |
$53,000
($4,416.67/month) |
|
Solo 401(k) |
$53,000
($4,416.67/month) |
|
IRA or Roth IRA |
$5,500
($458.33/month) |
50 or Older by Dec. 31st:
|
401(k) or 403(b) |
$24,000
($2,000/month) |
|
SIMPLE IRA |
$15,500
($1,291.67/month) |
|
SEP IRA |
$53,000
($4,416.67/month) |
|
Solo 401(k) |
$59,000 or
($4,916.67/month) |
|
IRA or Roth IRA |
$6,500
($541.66/month) |
by The MDTAXES Network | Nov 17, 2015 | 2015 Year End Newsletter
Now is a great time to begin planning to take full advantage of your employer?s flexible spending arrangement (FSA) during 2016.
FSAs provide employees a way to use tax-free dollars to pay medical expenses not covered by other health plans. Because eligible employees need to decide how much to contribute through payroll deductions before the plan year begins, many employers are offering right now to their employees the option to participate during the 2016 plan year.
Interested employees wishing to contribute during the new year must make this choice again for 2016, even if they contributed in 2015. Self-employed individuals are not eligible.
An employee who chooses to participate can contribute up to $2,550 during the 2016 plan year. Amounts contributed are not subject to federal income tax, Social Security tax or Medicare tax. If the plan allows, the employer may also contribute to an employee?s FSA.
Employers are not required to offer FSAs so you should check with your employer or human resources department to see if it is offered.
by The MDTAXES Network | Nov 17, 2015 | 2015 Year End Newsletter
Even if you’re covered under a retirement plan at work, you and your spouse can each contribute up to $5,500 into a traditional IRA or Roth IRA for 2015 and 2016, as long as your combined wages and net self-employment income exceeds the total amount contributed. Anyone 50 or older can contribute an extra $1,000, increasing the max contribution to $6,500.
Here is some good news for people looking to contribute to a Roth IRA. The amount you can earn and still contribute to a Roth has increased from 2014 by $2,000 for married couples and for single individuals, as follows:
|
Single Individuals |
Married Couples |
| Phase-out begins |
$116,000 |
$183,000 |
| Phase-out ends |
$131,000 |
$193,000 |
If your income is too high for a Roth, don’t forget that the rules changed a few years back, eliminating the income limitation as of 2010 for people looking to convert their IRAs to a Roth IRA. This tax law change provides high-income taxpayers with a great opportunity to get money into these tax-free investment accounts.
And if you’re married and your spouse isn’t covered under either an employer sponsored or self-employed retirement plan during the year, the 2015 phase-out range for your spouse making a deductible IRA contribution has increased to $183,000 – $193,000, which is identical to the Roth IRA phase-out limits.
by The MDTAXES Network | Nov 17, 2015 | 2015 Year End Newsletter
It’s not too late to cut your 2015 tax bill.? Prior to Dec. 31st:
- Increase your 401(k) and 403(b) contributions if you haven’t been contributing at the maximum rate all year. This year you can put away up to $18,000 ($20,000 if 50 or older) into your 401(k) or 403(b) plan.? If you?re self-employed, consider setting up a Solo 401(k) by 12/31.
- Take a look at your withholdings and instruct your employer to withhold additional taxes if you haven?t had enough taxes withheld during the year and might get hit with an underpayment penalty.
- Consider selling your non-retirement investments that have decreased in value since your capital losses can offset other capital gains realized during the year (including from your mutual funds), and then can be used to offset up to $3,000 of wages and other income.
- Send in your January 2016 mortgage payment early enough so it will be processed prior to 12/31/15. By sending in your payment a few weeks early, you can deduct the interest portion of that payment a full year earlier.
- Clean out your closets and donate your clothing and household items to a charitable organization since “non-cash” contributions are deductible if you itemize. Don?t forget to get a receipt. And make sure to make a list of the donated items, including each item?s condition since only donations of clothing and household items in “good condition or better” qualify for a deduction.
- For gifts of money, making your donation by credit card before December 31st allows you to deduct the donation on this year’s return, even if you don’t pay your credit card bill until 2016.? And you always have the option of donating appreciated investments to charities. You get to claim your donation based on the value of the assets donated, without paying any capital gains taxes on the appreciation.
- Pre-pay your projected state tax shortfall if you’ll be itemizing your deductions and won?t be subject to the alternative minimum tax.
- Pre-pay or pay off your medical bills if your total medical expenses exceed 10% of your income and you itemize.
