Loreen E. Huddleston
Certified Public Accountant
Creative, Cost-Effective, Competent Accounting Services
Specializing in Strategic Tax Planning & Preparation for Individuals, Businesses and Trusts
236 N. Santa Cruz Ave, Suite 236, Los Gatos, CA 95030 Phone: 408-395-1012 Fax: 408-395-7012 email: loreen@huddlestoncpa.com
Take the “long view” on income taxes.
What may be a positive move this year may create a tax trap for you next year. Loreen can forecast potential income tax impact over several years, using a a set of assumptions to create various scenarios, and assist you in minimizing income taxes over a period of two to five years, not just the current year.
As a premier provider of tax services for the Los Gatos area, Loreen is proud to offer her clients smart tax tips such as these:
Make well-reasoned financial decisions.
Never make a financial decision based solely on the current income tax impact. Sometimes the best financial transaction creates a negative current income tax impact. However, net of tax, it may be a great financial move. Loreen can calculate the income tax impact of a financial transaction before it is made, so all the factors can be weighed before making an important decision.
Understand your retirement income.
The same amount of income in retirement could result in higher net income. Payroll taxes will not be withheld from your pension or IRA distribution checks and you will not be contributing to the retirement plan. Thus you will not need as much gross income in retirement as when earning a wage. Further, with lower gross income, tax rates will likely be lower as well. Loreen can help you calculate the amount of income you will need in retirement, net of anticipated income taxes, to maintain your standard of living.
For more information, please
Or call 408-395-1012
"I consult with Loreen before I make a move regarding finances and tax issues, and on how it will impact the overall financial health of my family."
- Referral on LinkedIn
Helpful Tax Tips
IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained on this website was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.RS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained on this website was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.
HIGHLIGHTED TAX ISSUES FOR INDIVIDUALS
There are changes for 2011 tax returns in the way that Capital Gains and Losses will be reported to the IRS. Changes in Schedule D, and the addition of a new form to report each transaction, will make electronic reporting from your broker imperative. If you do not have access to your brokerage accounts online, your broker should be able to assist you in setting that up. If I can be of assistance, please ask. This is especially important if you have a “managed account”, or if you are an active trader with more than 50 stock transactions in a given year.
More taxpayers will be subject to Foreign Bank Account Reporting (FBAR) requirements. This reporting requirement not only relates to foreign bank accounts, but any investment held in a foreign country, either directly, through a foreign brokerage or as part owner in a “pass-through entity”. It is very important that you inform me of any foreign investments that you own or have signature authority over so we can determine whether the FBAR reporting requirements apply to you. Penalties for not reporting are severe.
Changes to the medical expense deduction for caregivers, as well for the excess cost of special foods due to medical condition, may benefit you if your medical expenses exceed the threshold of 7.5% of Adjusted Gross Income (AGI). If you believe this may pertain to you, please discuss with me.
Use Tax is required to be paid to the State of California in the amount of the sales tax that would have been paid on purchases made where no sales tax was charged, such as online purchases. This year, you can simply add an amount to your California tax liability from a table based on your income. For example, if your AGI is $100,000, the Use Tax would be $88. I recommend that we discuss this option to help avoid future audit and penalties.
HIGHLIGHTED TAX ISSUES FOR BUSINESS OWNERS
Forms 1099 are required to be issued by businesses to individuals or non-incorporated businesses to which the business paid more than $600 in a calendar year for services, rents or other specific transactions. Please contact me if you have any questions about what is or is not required to be reported. Forms 1099 are required to be mailed to payees by January 31 and reported to the IRS by February 28, as are Forms W-2. A Form W-9 should be kept on file for all vendors to whom more than $600 was paid, whether or not a Form 1099 was issued to them, if the name of the entity does not clearly indicate they are incorporated.
The FBAR regulations that relate to individuals, summarized above, may also apply to businesses that hold foreign investments. If your company has foreign interests, this matter should be reviewed thoroughly.
A ROTH-IRA could be a great vehicle for individuals to save for retirement and never pay tax on the growth or income earned by the account. Income limitations prevent most of my clients from benefiting from this retirement plan, but their children could benefit. If your child works for you in your business, you can pay your child a fair wage for actual work performed. Assuming their income is below the limitations, they can contribute up to the amount of their earnings, to a maximum of $5,000 per year. You can claim as a deduction the amount of wages paid to them, which will reduce your income tax (as well as self-employment tax, if applicable). The child’s tax rate is most likely much lower, so it would be a “win-win”.
If you believe you could benefit from these or other planning opportunities, let’s talk!
