Keep Financial Records Safe in Case of a Disaster

From IRS News:

Hurricanes, tornadoes, floods and other natural disasters are more common in the summer.? We encourage you to take a few simple steps to protect your tax and financial records in case a disaster strikes.

Here are five tips from the IRS to help you protect your important records:

1.?Backup Records Electronically.? Keep an extra set of electronic records in a safe place away from where you store the originals. You can use an external hard drive, CD or DVD to store the most important records. You can take these with you to keep your copies safe. You may want to store items such as bank statements, tax returns and insurance policies.

2.?Document Valuables.? Take pictures or videotape the contents of your home or place of business. These may help you prove the value of your lost items for insurance claims and casualty loss deductions. Publication 584, Casualty, Disaster and Theft Loss Workbook, can help you determine your loss if a disaster strikes.

3.?Update Emergency Plans.? Review your emergency plans every year. You may need to update them if your personal or business situation changes.

4.?Get Copies of Tax Returns or Transcripts.? Visit IRS.gov to get Form 4506, Request for Copy of Tax Return, to replace lost or destroyed tax returns. If you just need information from your return, you can order a transcript online.

5.?Help from the IRS.? The IRS has a Disaster Hotline to help people with tax issues after a disaster. Call the IRS at 1-866-562-5227 to speak with a specialist trained to handle disaster-related tax issues.? Or visit their website at IRS.gov and click on the ?Disaster Relief? link in the lower left corner of the home page.

You can also find help with the IRS videos and podcasts:

IRS YouTube Videos:

IRS Podcasts:

PART II: A PROFESSIONAL CRITIQUE OF MITT ROMNEY’S 2011 and 2010 TAX RETURNS

By Andrew Schwartz, CPA

Last month, Presidential Candidate Mitt Romney released his 2011 and 2010 tax returns to the public.? You can download a complete copy of these federal tax returns at:

Here is?a continuation of?what I observed upon reviewing his returns (Read Part 1):

  • The total 2011 tax liability reflected on this tax return is $3,226,623 – or just over 15% of his gross income of $20,908,880.? This might seem quite low, but he claimed a substantial deduction of $4,020,572 for donations to charities.? Without his charitable donations, his total federal tax liability would have been approximately $4.6 million, or 22% of his gross income.
  • The total 2010 tax liability reflected on this tax return is $3,009,766 – or just under 14% of his gross income of $21,646,507.? This might also seem very low, but he claimed substantial donations to charities of $2,983,974.? He also saved taxes by taking a $129,697 credit for Foreign Taxes paid during the year.? Without these two tax breaks, his total federal tax liability would have been approximately $4.2 million, or 19.5% of his gross income.
  • The Romneys claimed itemized deductions of $5,688,179 on their 2011 Schedule A and $4,519,140 on their 2010 Schedule A.? For 2011, their itemized deductions include: $4,020,572 of charitable donations, $46,033 in investment interest expense, $226,356 in real estate taxes, and $1,323,094 in state income taxes.? They also claimed $490,000 in Miscellaneous Itemized Deductions that were passed through to him by one of his investment trusts or partnerships, of which only $71,978 was deductible since Miscellaneous Itemized Deductions are only allowable to the extent they exceed 2% of your income.?
  • Finally (and surprisingly), Mitt Romney had a sizeable capital loss carryover reported on 2010 Schedule D.? Take a look at line 14 of that year’s Schedule D and you’ll see that he went into 2010 with a capital loss carryover of $4,844,089.? His returns don’t indicate when or how those losses arose.

Extremely? Complicated Return

These tax? returns are anything but straightforward.? In my office, we don’t prepare? any returns nearly as involved as Mitt Romney’s 2011 and 2010 returns.? I? can only imagine how many hours the staff of PriceWaterhouseCoopers spent on? preparing and reviewing these tax returns.

A PROFESSIONAL CRITIQUE OF MITT ROMNEY’S 2011 and 2010 TAX RETURNS

By Andrew Schwartz, CPA

Last month, Presidential Candidate Mitt Romney released his 2011 and 2010 tax returns to the public.? You can download a complete copy of these federal tax returns at:

Here is? what I observed upon reviewing his returns:

  • Mitt Romney reported gross income of just about $21 million for each of these two years.? A little more than 50% of this income was from long-term capital gains and qualified dividends, which are taxed at the maximum rate of 15% for the regular tax calculation.??
  • With respect to his self-employment income, Mitt Romney did not appear to be very concerned about minimizing his tax burden.? Take a look at the Schedule C each year, and while he did not claim any expenses against his Author/Speaking Fees income of $110,500 in 2011, he did claim his agent commission of $39,756 and advertising expenses of $9,000, for a total of $48,756, against his gross self-employment income of $528,871in 2010. Apparently, he decided not to claim any other expenses, including the home office or automobile mileage, that many self-employed individuals claim on their Schedule C each year. Mitt Romney also did not contribute to a retirement plan either year based on his net self-employment income, which would have reduced his taxable income.
  • If you look at line 45 of his tax return for both year, you’ll see that he paid a ton of Alternative Minimum Taxes each year.? Based on these returns, his AMT was $224,425 in 2011 and $232,989 in 2010.? While most taxpayers with income greater than $1 million pay no AMT, people with substantial long-term capital gains and qualified dividends end up paying this tax due to how this tax calculation works.

More tomorrow!