Is your file cabinet overflowing? Do you hesitate to purge tax information because you’re not sure what to keep and what to discard? Here’s a quick guide to help you cut through the clutter.
Hi guys, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.com
1. Expenses. Support for deductions includes charitable donation acknowledgments, receipts for employee business expenses, and automobile mileage logs. Retain these at least seven years after claiming this on the return.
2. Income. The same seven-year rule also applies to common tax forms such as 1099s showing interest, dividends, and capital gains from banks or brokerages, and Schedule K-1s from partnerships and S corporations. The IRS recommends holding on to your W-2s until you start collecting social security.
Tip: You can shred interim income reports once you’ve compared the totals to annual forms.
3. Retirement accounts. You may have to calculate the taxable portion of distributions, so keep records showing your contributions until you’ve recovered your basis.
4. Tax returns. The statute of limitations is usually three years but can be six years if underreported income is involved. In cases of fraud or when no return is filed, the IRS has an indefinite time period for assessing additional tax.
As a general rule, keep federal and state returns a minimum of seven years.
If you like to learn more, click the link lowermytaxnow.com and subscribe to my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.com

Hi guys, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.com
Did you ever have an error in your return? Do you know you can amend it to report the correct amounts? On this segment, I will give you some tips for amending returns:

1. Use Form 1040X. You must file a paper amended return; this form can’t be e-filed.
2. File an amended return to correct errors or change your original filing.
3. Don’t file an amended return to correct math errors or to attach forms you forgot to attach originally. The IRS will mail a request for the forms and will automatically correct math errors.
4. You generally have three years from the original filing date to file an amended return.
5. If you’re filing for multiple years, you must file a separate Form 1040X for each year.
6. If you’re due a refund from your original filing, wait until you’ve received the original refund before you file Form 1040X for an additional refund.
7. If you owe more tax with Form 1040X, pay it as soon as possible to avoid added interest and penalties.
8. You can track the status of your filed Form 1040X with the IRS’s “Where’s My Amended Return?” tool at www.irs.gov

If you like to learn more, click the link lowermytaxnow.com and subscribe to my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.com

Hi guys, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.com
If you are in a position to give, making annual gifts can be an excellent strategy for reducing both your estate and income tax liability. Planning and doing your gift-giving before year-end is especially smart if you are giving real estate property. You will then remove more income from your 2015 tax return. The annual tax-free limit for 2015 gifts is $14,000 to as many individuals as you like.

If you like to learn more, click the link lowermytaxnow.com and subscribe to my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.com

Hi guys, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.com
Here’s a midyear tax planning tip for you
Take time this summer, to review, your investment portfolio, for potential tax savings. Here are some tax strategies you might want to incorporate:

1) Sell stocks that you bought and went down in value to offset your capital gains.
2) You can donate appreciated stock that you have owned for more than a year to charity. By doing this, you can avoid capital gains altogether – plus you will get a deduction for the stock’s fair market value. Sweet!
3) You can buy investments that pay tax-free income, such as municipal bonds

If you like to learn more, click the link lowermytaxnow.com and subscribe to my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.com

Hi guys, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.com
Do you have any summer job tax tip?
Yes I do!
If your child has a summer job, consider opening an IRA for your kid.
If he has W-2 or earned income he can contribute to a regular or a Roth IRA.
The regular IRA is tax deductible. However, since your child might have minimal income, the IRA deduction will result in smaller tax savings.
Conversely, the Roth IRA is not tax deductible. However, the advantage of a Roth over a regular IRA is that withdrawals in retirement will be tax-free. That’s huge! We’re talking about tax-free income.
Lastly, the contribution limit for both kinds of IRA for 2015 is the lesser of your child’s W-2/Earned income or $5,500.

If you like to learn more, click the link lowermytaxnow.com and subscribe to my weekly blog.

Until then. This is Noel Dalmacio, your ultimate CPA at lowermytaxnow.com

Hi guys, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.com
Did you convert all or part of a retirement account to a Roth IRA during 2014?
And do you now wish you hadn’t?
Here’s some good news: You have until October 15, 2015, to change your mind,
even if you already filed your federal income tax return.
The tax term that we use for undoing the conversion and switching your funds back to a traditional IRA from a Roth is “recharacterization.”
You can recharacterize any amount of your original conversion, no matter your income, and for any reason. When you recharacterize the entire conversion amount, you put yourself back in the position you were in originally.
Why would you want to do that? Here are some tax situations that might warrant the “redo”
1. You might be in higher tax bracket than what you anticipated and reconverting will reduce your income.
2. Your investments didn’t do as well as you anticipated and the value in your account has declined.
Leaving the money in the new Roth means you pay tax on the original amount you converted. If you do a “redo” you will save tax dollars.
If you like to learn more, click the link lowermytaxnow.com and subscribe to my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.com

A tax-deferred exchange is a tax planning technique which should be considered by any taxpayer that is relocating or disposing of property. Often referred to as a “tax-free exchange,” the tax-deferred exchange allows you to exchange certain business or investment property for other “like-kind” business or investment property and pay no income taxes currently. Your tax liability is deferred until you later dispose of the property for which you traded. Exchanges require careful planning and professional assistance.

Hi guys, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.com
How to safeguard records before a disaster strikes?
There’s never a good time to plan for a disaster. There’s never a better time either. So why wait? Instead of having to reconstruct personal and business records in the aftermath of an unexpected calamity, safeguarding documents before you suffer a loss will make it easier to claim casualty deductions and other tax breaks.
Here’s an overview of some of the paperwork to include in your disaster preparedness plan and why you’ll need it.
1. Purchase and acquisition information. The amount of a casualty loss is generally the lesser of your adjusted basis or the reduction in your property’s fair market value due to the casualty. With the exception of gifts, inheritances, and certain other property, adjusted basis typically equals what you paid for your assets plus improvements, reduced by depreciation or other reductions.
Tip: Make duplicates of titles, mortgages, closing papers, and receipts or scan them into digital form. Store the originals and the copies in separate locations, preferably in fire- and water-proof containers.
2. Prior-year tax returns. When your loss occurs in a presidentially declared federal disaster area, you can amend an already filed prior-year federal return to claim the deduction and the resulting tax refund.
3. Detailed inventory. As a general rule, you’re required to reduce the amount of your personal property casualty losses by $100. In addition, losses must exceed 10% of your adjusted gross income (except in federal disaster areas). A list of your possessions, supplemented by photographs or a video, is essential for maximizing your deduction.
So please make sure you have all these paperwork to streamline the process in case of any casualty.

If you like to learn more, click the link lowermytaxnow.com and subscribe to my weeklyblog.

Until then, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.com

Summer is here and so are tax-saving opportunities. Here are seven suggestions for cutting your tax bill.
1. Rent out your vacation home. If you own a second home, rent it out this summer when you’re not using it. Generally, you can offset the rental income with rental-related expenses, leaving you with little or no tax liability.
2. Harvest capital gains or losses. Use your semi-annual portfolio review to spot investments with built-in capital gains or losses that can offset transactions from earlier in the year. Any excess capital loss can be deducted against $3,000 of ordinary income in 2015.
3. Hire your kids. Does your child need a summer job? Hire her to work in the family business. The wages earned will be taxed using your child’s lower tax bracket.
4. Send the kids to camp. Are you the working parent of under-age-13 children? You may be able to claim a tax credit for the cost of day camp. Just remember, overnight camps don’t qualify.
5. Combine pleasure with business. When you travel out of town for business reasons, you can deduct the full cost of your airfare, even if you spend time sightseeing while you’re away. Expenses for side trips aren’t deductible.
6. Entertain business customers. Generally, you can deduct 50% of the cost of entertaining customers before or after a substantial business discussion. This includes golf outings or an evening of dinner and drinks.
7. Host a staff get-together. The usual 50% limit on entertainment deductions doesn’t apply to summer barbecues and picnics if the entire staff is invited. In that case, you can write off 100% of the cost.
Contact us for details on these and other summertime tax-saving ideas.

Hi guys, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.com
How do you maximize tax breaks for your vacation home?
If you own a vacation home, a boat or an RV
that you also rent out to others,
keep track of the rental use during the year to maximize your tax breaks.
Here are some tax strategies you need to consider:
Number 1. Receive tax-free income. Yes! You heard it right!
If you rented it out for 14 days or less during the year, you don’t have to report the income. You get tax-free income!
You can generally deduct mortgage interest and real estate taxes, but you can’t deduct any other rental expenses. Hey, tax-free income is still great stuff!
Number 2 – Limit your personal use so you can deduct all your rental expenses.
If you limit your personal use to NOT more than 14 days or 10% of the time the home is rented, all rental expenses are deductible.
However, conversely, number 3* If you use the property personally for more than 14 days or 10% of the number of days it’s rented, the rules change. Your rental deductions (except for taxes and mortgage interest) are limited to the amount of your rental income.
So here’s an example: You stayed in your vacation home 20 days last year. It was rented at fair market value for 190 days. In this example, your personal use exceeded the 10% limit (19 days). Therefore, your rental deductions are limited to the rental income you received.
Number 4. Convert the property as your primary home, and the gain when you sell may be tax-free. If you use your vacation home as your principal residence for two out of the five years before you sell it, you may exclude up to $250,000 of gain ($500,000 for married couples) from your income. However, you will have to pay tax on gain to the extent of certain depreciation you previously taken after May 6 , 1997 and you might need to allocate the gain on sale between the primary home and the rental.
The rules are a little bit complex, but a basic understanding of the rules and good recordkeeping will help you get the best tax breaks from your vacation home.

If you like to learn more, click the link lowermytaxnow.com and subscribe to my weeklyblog.

Until then,this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.com