Brentwood Ins ~ Peter Tuttle ~ Cool's Blog

TIPS YOU CAN USE: DANGERS OF GOING BARE ON WATERCRAFT COVERAGE

Fri, 18 Jul 2008 11:33:41 -0500

TIPS YOU CAN USE: DANGERS OF GOING BARE ON WATERCRAFT COVERAGE

Boatowners typically face large property and liability loss exposures from
their boating activities while often going without proper insurance. The
following loss scenarios point to the need for specialized boatowners
coverage. Remember that many of these loss examples are not covered (or
have tough restrictions) under the standard personal auto or homeowners
policies.

* Your cruiser collides with a speed boat whose operator fails to yield
the right of way, causing extensive damage to your boat. The owner of the
speed boat does not have any insurance coverage.

* An expensive bass boat you just purchased is stolen from your home.

* Your 27-foot-long sailboat is damaged by a major hailstorm while docked
at the marina.

* Your sport fishing boat is struck by lightning, incapacitating its
electrical system.

* Your son's friend is water skiing behind your boat and he falls into the
lake, injuring himself, due to the excessive speed of the boat.

* You negligently cause another boat to overturn to avoid a collision.

* Your outboard motor explodes, seriously injuring your next door
neighbor.

If you have any watercraft exposures, please call our office for a review
of your loss exposures and insurance solutions.

This article is brought to you by Peter Tuttle, CPA at Cool Springs Insurance.com. You may contact me by sending an e-mail via the link to the right of my active rain blog page. Please visit my website at http://www.petertuttlecpa.com/

"I help individuals, families, small-businesses & non-profits with their income tax & insurance needs."

IRS Circ 230 disclosure: To ensure compliance w/ rqmts imposed
by US Treasury Regs, we inform you that any tax advice contained
in this communication (including any attachments) was not intended or
written to be used, and cannot be used, for the purpose of (i) avoiding
penalties under the IR Code or (ii) promoting, marketing or
recommending to another party any transaction or matter addressed herein.

TIPS YOU CAN USE: ARE THE LIMITS OF INSURANCE FOR YOUR HOME ACCURATE?

Fri, 20 Jun 2008 11:42:30 -0500

TIPS YOU CAN USE: ARE THE LIMITS OF INSURANCE FOR YOUR HOME ACCURATE?

Is the amount of property insurance on your home correct? What is the
appropriate amount of coverage for your home? To begin with, it should be
insured for at least 80 percent of its replacement cost when covered under
a standard homeowners policy. Replacement cost refers to the amount
necessary to repair or replace damaged building parts with items of like
kind and quality. Some insurance companies even require 90 percent or
higher figures when the guaranteed replacement cost option is offered.
With this option, the policy pays the full cost of replacing your home,
without any depreciation and often without a maximum reconstruction
payment. (This gives you added protection if there is a sudden jump in
construction costs due to a major shortage of certain building materials.
Construction costs often "surge" following large catastrophes, such as
hurricanes.) Note that guaranteed replacement cost coverage approaches can
vary by state and are not even available in every state.

Many homes are either underinsured or overinsured. For example, some homes
insured for long periods of time with one insurance company may have
inadequate limits of insurance due to increased building costs. In many
cases, homes have been remodeled and improved, and this information has
not been conveyed to the insurance agent or company, resulting in severe
underinsured home values. If your home is underinsured, you not only have
inadequate protection for total losses, but you may also lack full
protection for smaller losses.

Sometimes homes are mistakenly insured for their market value. However,
market value is normally not indicative of the home's replacement cost.
For example, market value also reflects the cost of the foundation and the
nondestructible land value, both of which normally survive intact if the
house burns to the ground and has to be rebuilt.

In addition, some homes may be insured improperly to meet mortgage company
requirements. Some mortgage companies require the amount of insurance be
at least equal to the mortgage balance on the house. The mortgage balance
is also not reflective of the home's replacement cost, which is often
considerably more but can also be less. Insurance companies and agents
often struggle in properly educating mortgage companies about these
distinctions, but there is nothing to prevent you from insuring to actual
replacement cost if that is indeed greater than the mortgage balance. The
problem occurs when the mortgage balance is greater than the replacement
cost, which will result in the purchase of a higher limit than needed.

The bottom line is that you should work with your insurance agent to
determine the correct replacement cost and resulting insurance limit for
your home. Most agents use sophisticated replacement cost estimating
packages that can fairly and accurately determine the replacement cost
value of your home. Factors that these programs use to determine this
figure include the following.

* Square footage of the home, including its configuration

* Construction costs for your community

* Exterior wall construction type, including frame, stucco, brick, or
brick veneer

* Style of home

* Number of bathrooms and bedrooms

* Roof type

* Attached garages, fireplaces, built-in cabinets, and other special
features, such as hardwood floors

The more advanced replacement cost estimating programs require detailed
information to improve the valuation estimate. For example, a
rectangular-shaped home with 1,800 square feet will have a much lower
replacement cost than a similar-sized home with an "L" shape. In other
words, the better cost estimating programs require information about the
number of corners in the home. The more detailed information your agent
asks about your home, the more confidence you can place in his or her
recommended limit of insurance.

As a final note, you should request an annual review of your homeowners
policy to keep up with increasing building supply and labor costs. Also
ask your agent about the advisability of adding an "inflation guard"
endorsement to your policy or about the availability of guaranteed
replacement cost coverage to help assure that your home is properly
protected.

"I help individuals, families, small-businesses & non-profits with their income tax & insurance needs."

TIPS YOU CAN USE: WINDSTORM RISK CONTROL TIPS

Fri, 16 May 2008 11:58:02 -0500

TIPS YOU CAN USE: WINDSTORM RISK CONTROL TIPS

Windstorm and hurricane losses account for an inordinate share of
homeowners losses every year. In particular, people on the southeastern
and central eastern seaboard and the Gulf Coast face substantial loss
exposures to hurricanes and tropical storms. There are, however, steps you
can take concerning your home that can reduce your exposure to these
losses. These include risk control measures to four critical parts of your
home susceptible to high wind damage -- the roof, windows, entry doors,
and garage doors.

* Roof -- The installation and design of a roof is a critical factor
concerning protection from high winds and hurricanes. For example, the
roof sheathing (the boards or plywood nailed to the roof rafters or
trusses) can fail during a hurricane if not property installed. If many of
the nails have missed the rafters, additional nailing is necessary. The
sheathing on your roof should comply with the current building codes. In
wind-prone areas, many building codes require six nails per shingle rather
than four. Adding screws between the nails can also provide reinforcement.
In addition, gables need to be tightly attached and reinforced to the
frame walls.

Lastly, hurricane clips should be considered in hurricane-prone areas.
These clips help prevent mammoth winds from ripping the roof off a house.
The clips are made of galvanized steel and are used to connect the rafters
to the roof at the top of the house and the bottom part of the house to a
plate that is bolted to the slab. Properly installed hurricane clips
enable your roof to withstand winds of up to 100 mph.

* Windows -- One way to protect your windows is to install
impact-resistant shutters over all large windows and glass doors. Not only
do they protect your doors and windows from wind-borne objects, but they
can also reduce damage caused by sudden pressure changes when a window or
door is broken. An alternative is the installation of impact-resistant
windows and patio doors.

* Entry doors -- Solid wood or hollow metal doors are more effective in
resisting high winds. They should have at least three hinges and a dead
bolt security lock.

* Garage doors -- Because of their width, doublewide garage doors are more
susceptible to high winds than singlewide doors. Retrofit kits are
available for doublewide garage doors. These can reinforce your garage
door by installing horizontal and/or vertical bracing onto each panel.
Heavier hinges can also strengthen your home.

This article is brought to you by Peter Tuttle, CPA. You may contact me by sending an e-mail via the link to the right of my active rain blog page. Please visit my website at http://www.petertuttlecpa.com/

"I help individuals, families, small-businesses & non-profits with their income tax & insurance needs."

CELL PHONES AND DRIVER DISTRACTIONS

Fri, 18 Apr 2008 23:49:41 -0500

TIPS YOU CAN USE: CELL PHONES AND DRIVER DISTRACTIONS

According to the National Highway Traffic Safety Administration, driver
distractions are a contributing cause in approximately 25 percent of all
motor vehicle crashes or about 1.2 million accidents. However,
distractions can be hard to quantify, and the number of accidents due to
driver distractions is difficult to define. What can further complicate
matters is that there may be more than one distraction, such as eating
while chastising a child in the backseat. In addition, vehicles have
become much more sophisticated with options such as navigation systems,
DVD players, and video games.

Cell phones are considered one of the leading driver distractions. As a
result, more and more communities are placing restrictions on drivers' use
of cell phones. The following tips are offered to motorists in regards to
cell phone use in vehicles.

* You should wait until the car trip is complete before placing a call.
Your cell phone's voice mail feature should answer a call while you are
driving.

* Absolutely essential calls should only be performed while stopped.
However, it is not wise to pull over on the side of the road, where a
rear-end collision is possible. Instead, you should pull into a parking
lot to perform this task.

* The phone should be placed where it is easy to see and reach.

* You should take advantage of speed dialing capabilities.

* You should never drive and talk on the cell phone during stressful,
emotional, or complex discussions since the risk of an accident is
heightened.

* You should consider using a hands-free cellular phone since some studies
indicated that these are safer to use.

* You should never text message while driving.

"I help individuals, families, small-businesses & non-profits with their income tax & insurance needs."

Itemizing Tax Deductions - Should You or Shouldn't You?

Fri, 21 Mar 2008 03:20:00 -0500

Itemizing Tax Deductions - Should You or Shouldn't You?

Each year, taxpayers everywhere ask whether it's better to itemize their deductions or opt for the standard deduction. What's the difference and how does it affect your bottom line?

Some taxpayers must itemize, even if their deductions are less than the standard deduction. Those taxpayers include nonresident aliens, dual-status aliens, and individuals who file returns for periods of less than 12 months. Additionally, when a married couple files separate returns and one spouse itemizes deductions, the other spouse must itemize as well.

In general, itemizing your deductions saves you more tax dollars only if the deductions exceed the standard deduction. For 2007, the standard deduction for single filers is $5,350 and $10,700 for those filing jointly. For married taxpayers who file a joint return, the standard deduction will remain twice that of single filers through 2010.

Itemized deductions are certain expenses that you can use to lower total income, and thus, your taxes. The categories include:

• Medical and dental expenses;

• State and local income taxes, or sales tax;

• Real estate and personal property taxes;

• Home mortgage and investment interest;

• Charitable contributions;

• Casualty and theft losses;

• Gambling losses;

• Job expenses; and

• Miscellaneous deductions.

Some itemized deductions, including medical expenses or miscellaneous deductions such as investment expenses, safe deposit fees, professional education, employee job-hunting expenses, and tax-preparation fees, are not allowed until they exceed a certain "floor" amount. For this reason, grouping expenses so you can itemize certain years often helps.

The highest floor to exceed is for medical expenses. Your medical expenses are not allowed as itemized deductions unless they exceed 7.5 percent of your adjusted gross income (AGI). That means if you have an AGI of $100,000, the first $7,500 of your medical expenses won't count.

Miscellaneous itemized expenses are also deductible only after they exceed 2 percent of your AGI. So, with an AGI of $100,000, your first $2,000 of miscellaneous itemized deductions won't count.

If your itemized deductions do not exceed these floor amounts, there are a few things you can do to maximize your tax savings. You can elect to accelerate or defer the payment of certain expenses such as property taxes, certain medical expenses, charitable contributions, or interest payments. For example, the cost of elective medical procedures can be deferred until a later year. If you lack the cash for the cost, you can charge the expense on your credit card and pay the next month. The cost is deductible in the year it is charged, not when the payment is made.

With the standard deduction rising each year, careful planning is required to determine if bundling deductions will work for you. Then the standard deduction can be used every other year, maximizing your tax savings.

"I help individuals, families, small-businesses & non-profits with their income tax & insurance needs."

TIPS YOU CAN USE: EVALUATE YOUR NEED FOR FLOOD INSURANCE

Wed, 19 Mar 2008 12:09:21 -0500

TIPS YOU CAN USE: EVALUATE YOUR NEED FOR FLOOD INSURANCE

According to FEMA, flooding causes billions of dollars of property damage
in the United States each year. If you are like many homeowners, however,
you may be unaware that the standard homeowners insurance policy you buy
does not cover flood losses. You may believe that you have a low risk to
this peril but FEMA reports that approximately 33 percent of all flood
claims occur in communities in which flooding is deemed to be a low to
moderate risk. So do you really need a separate flood policy? The
following tips and ideas may prove helpful in answering this question.

* Contact us to see if you live in a community that participates in the
National Flood Insurance Program (NFIP), a prerequisite to qualify for
flood insurance. Participating communities must agree to adopt and enforce
certain floodplain management regulations, including building construction
and zoning laws that minimize the risks of flood damage.

* Ask us to see if you are in a floodplain. Or, if you prefer, go to
www.floodsmart.gov and select "What's Your Flood Risk?" Enter your home
address and this Web site will tell you whether you are in a low-,
moderate-, or high-risk area.

* Consider purchasing flood insurance even if you are in a low-to
moderate-risk community. In these areas, you may be eligible for the
Preferred Risk Policy, with premiums as low as $112 per year including
coverage for your personal property.

* Note that a flood policy does not take effect until 30 days after you
purchase the coverage. Thus, trying to purchase coverage after the local
meteorologist announces a flood alert for your community won't work.

* The maximum limit of insurance in the NFIP for your home itself is
$250,000. If your residence's value exceeds this amount, ask us about
excess insurance for losses above the federal policy's maximum limits.
This insurance may be available from private insurers.

* Don't assume that the government will bail you out if you suffer a flood
loss and don't have a flood insurance policy. That decision is a gamble
you may not win. Remember that federal disaster assistance, if available,
is usually a loan that must be paid back with interest.

* Discuss all the pros and cons of flood insurance with us before making
your final decision.

"I help individuals, families, small-businesses & non-profits with their income tax & insurance needs."

Covering the Cost for College While Saving Tax Dollars

Sun, 09 Mar 2008 03:55:31 -0500

Covering the Cost for College While Saving Tax Dollars

Saving for college should ideally take place well before your child reaches college age, but for many reasons that isn't always possible. Whether you have years to go before your children are ready for college or you already have a coed in the house, there are options available to help minimize your expenses by taking advantage of tax benefits. Below are some suggestions to get you started:

• A Qualified Tuition plan, also called a Section 529 plan, is a trust naming your child as the beneficiary. Contributions to the trust are considered taxable gifts; however, you can contribute up to $12,000 annually ($24,000 if your spouse also contributes) and escape the gift tax. If you contribute more, you can treat the gifts as if they are made over a five-year period. The earnings on the contributions accumulate tax-free until the college costs are paid from the funds. Distributions are tax-free to the extent the funds are used to pay qualified higher education expenses.

• You can establish a Coverdell Education Savings Account (ESA) and make contributions of up to $2,000 for each child under the age of 18. Although you can't deduct contributions, distributions - including earnings - are tax-free if spent on higher education expenses. If the child doesn't attend college, the money must be withdrawn when the child turns 30, or transferred tax-free to a Coverdell ESA of another member of the child's family who hasn't reached age 30.

Tuition tax credits will help save you tax dollars once the tuition bills arrive. Tax credits reduce your tax liability dollar for dollar. There are two different credits available:

• The Hope Tax Credit is available up to $1,650 in 2007 per student for the first two years of college. This equals a 100-percent credit for the first $1,100 in tuition and a 50-percent credit for the second $1,100.

• A Lifetime Learning Credit is available up to $2,000 per family for every additional year of college or graduate school. This equals a 20-percent credit for up to $10,000 in tuition for 2007.

Some deductions are also available. Deductions reduce your overall taxable income, which ultimately reduces your tax bill.

• You can deduct up to $2,500 of the interest on loans used to pay for your child's college education. The deduction is available even if you don't itemize.

• Through 2007, you may be permitted to take an above-the-line deduction of up to $4,000 for college tuition and related expenses that you pay. Your income must be less than $65,000 ($130,000 if filing a joint return). If your income is over these limits, you are allowed a deduction up to $2,000. You are allowed no deduction if your income exceeds $80,000 ($160,000 of filing a joint return).

"I help individuals, families, small-businesses & non-profits with their income tax & insurance needs."

E-mails From the IRS? Be Skeptical

Sat, 01 Mar 2008 01:09:04 -0600

E-mails From the IRS? Be Skeptical

Have you ever received an e-mail that promises you an additional tax refund? In one day, I received six of them, each with a higher amount than the last. Unsuspecting people may fall for such a gimmick and unwittingly start providing the sender with personal information with the hope that free money will come their way.

Senders of these types of e-mail have found the perfect means to intimidate taxpayers into filling out legitimate-looking, but phony, IRS forms. There are several variations of the e-mail. The newest version will be related to the 2008 "Stimulus rebate." Others will say you have a refund coming to you and all you need to do is fill out a form online and the IRS will send it to you. Another scam involves a "Tax Avoidance Investigation" e-mail claiming to come from the IRS' "Fraud Department" in which you are asked to complete an "investigation form," for which there is a link contained in the e-mail. It is believed that clicking on the link may activate a Trojan horse that has the potential to take over your computer hard drive and allow someone to have remote access to your computer.

Common sense tells you to always exercise caution when you receive unsolicited e-mails or e-mails from senders you don't know. Most importantly, the IRS never sends out unsolicited e-mails and it never e-mails requests for personal and financial information including PIN numbers, passwords, or similar secret access information for their credit card, bank, or other financial accounts.

If you do receive a questionable e-mail claiming to be from the IRS, do not open any attachments or click on any links contained in the e-mail. The IRS encourages you to forward those e-mails to phishing@irs.gov. "Phishing" is the sending of an e-mail that claims to be from some well-known organization to trick the recipient into revealing information for use in identity theft.

Since the IRS established the e-mail fraud mailbox last year, it has received more than 17,700 e-mails from taxpayers reporting more than 240 separate phishing incidents. The Treasury Inspector General for Tax Administration (TIGTA) has currently identified host sites in at least 27 different countries, as well as within the United States.

To protect yourself from having your identity stolen, guard your personal information, and always verify the validity of any forms or correspondence requesting you to divulge personal information. If you have any question at all, look up the number and call the organization that sent the correspondence BEFORE supplying any information. Do not rely on phone numbers or e-mail addresses provided with correspondence. Be suspicious of any unsolicited correspondence that requests the following types of information:

- Date of birth
- Social security number
- Passport number
- Bank name
- Credit card information
- Account number, type, and date opened
- E-mail address
- Occupation
- Daytime phone number
- Frequency of U.S. visits
- Information about spouses, children, and parents

Any website that collects personal information should contain "https" in the URL address at the top (the "s" indicates that it is a secure site). It should also have a padlock in your browser's status bar. Double-click on the padlock to see the website's security certificate. Certificates show the owner of the website in the "Issued to" line. An @ sign, "under construction," or "cannot be located" in this line is reason for suspicion. The certificate should also show dates with a range of only a few years in the "Valid from" line (such as 7/29/05 - 7/29/07). If there is ANY question in your mind about any website, do not use the link. Instead, log onto the website directly (such as www.irs.gov), and find phone numbers to call. Be safe, not sorry.

"I help individuals, families, small-businesses & non-profits with their income tax & insurance needs."

Are You Reporting All of Your Income?

Fri, 29 Feb 2008 02:27:34 -0600

Are You Reporting All of Your Income?

The IRS is stepping up its efforts to close the tax gap and taxpayers who underreport income are their prime targets. For those of you who are unaware, the tax gap, or the amount of taxes that go unpaid each year, results from taxpayers underreporting their taxable income. Current estimates place the tax gap at nearly $350 billion. Fortunately most of you want to pay your fair share of taxes, and others simply need a better understanding of their obligations.

While most of you are aware you must include wages, salaries, interest, dividends, tips, and commissions as income on your tax returns, many don't realize that you must also report other income, such as:

• Cash earned from side jobs;

• Barter exchanges of goods or services;

• Awards, prizes, contest winnings; and

• Gambling proceeds.

You are required to report all income from any source and any country unless it is explicitly exempt under the U.S. tax code. There may be taxable income from certain transactions even if no money changes hands. Generally, the IRS considers all income received in the form of money, property, or services to be taxable income unless the law specifically provides an exemption.

It is a common misconception that if a self-employed taxpayer does not receive a Form 1099-MISC or if the income is under $600 per payer, the income is not taxable. There is no minimum amount that you may exclude from gross income. All income earned through your business, as an independent contractor, or from informal side jobs is self-employment income, which is fully taxable and must be reported on Form 1040.

Independent contractors must report all income as taxable, even if it is less than $600. Even if the your client does not issue you a Form 1099-MISC, you must report the income, whatever the amount.

Fees received for babysitting, housecleaning, and lawn care are all examples of taxable income, even if you are paid less than $600 for the year.

Bartering is an exchange of property or services. The fair market value of goods and services exchanged is fully taxable and must be included on Form 1040 in the income of both parties to the exchange. An example of bartering is a plumber doing repair work for a dentist in exchange for dental services. Income from bartering is taxable in the year in which you received the goods or services.

Subject to certain exceptions, the cash value of prizes or awards won in a drawing, quiz show program, beauty contest, or other event must be included as taxable income. You must also include as taxable income the fair market value of merchandise or products you won as a prize or award.

Gambling winnings are fully taxable regardless of the amount. Gambling income includes winnings from lotteries, raffles, horse races, poker tournaments, slots, and casino games. It includes cash winnings as well as the fair market value of prizes such as cars, boats, and trips.

Even if you are not issued Form W-2G, all gambling winnings must be reported as taxable income regardless of whether any portion is subject to withholding. In addition, you may be required to pay an estimated tax on the gambling winnings. Losses may be deducted only if you itemize your deductions and only if you also report gambling winnings. The losses you deduct may not be more than the gambling income you report on your return.

The general rule is that all income, from whatever source, is taxable unless there is a specific exclusion. For example, a gift is not taxable to you even if it is a gift of money. The thing to keep in mind is that the IRS is on the look-out for underreported income and is known for employing some crafty ways to find it.

"I help individuals, families, small-businesses & non-profits with their income tax & insurance needs."

Keeping your name in front of potential clients

Thu, 28 Feb 2008 01:26:40 -0600

Most Real Estate Agents, not unlike other business people, strive to keep their name in front of potential clients. We send notes and congratulations, by US mail and e-mail. We pick up the phone and call them. We send Birthday cards, Anniversary cards, cards on their children's birthday. We mail Christmas cards and calendars.

One great move that Real Estate Professionals can do is a very simple one. It doesn't matter if you were the selling agent or the buyers agent. If you have access to the HUD-1 closing statement from transactions you were involved in, what a better way to follow up with a client for the past year than to mail them a legible copy of their closing statement.

I suggest you do this no earlier than January 15 of the following year, and certainly if you do it in February or by March 15, it may still have an impact. But during the second half of January will have the most impact.

Why you may ask. Well, one of the changes in people's lives that often has them seeking professional tax advise and tax preparation is the purchase or sale of their personal residence. And the HUD-1 Settlement Statement is full of information that is helpful in determining deductions for your clients on their tax return. The allocation of mortgage interest and property taxes being the two most prominent items.

So send a follow up letter to your client, suggest that the attachment may be helpful to them when they prepare their tax return this spring, and wish them well and encourage them to contact you if they are in the market to buy or sell or have friends who are.

"I help individuals, families, small-businesses & non-profits with their income tax & insurance needs."

It's Tax Time. Do You Need a Professional?

Wed, 27 Feb 2008 00:10:09 -0600

It's Tax Time. Do You Need a Professional?

As if the after-holiday bills aren't rolling in fast enough already, along comes tax time. You're probably as thrilled about that as the average taxpayer. With the growing complexity of tax preparation, you, like a majority of the population, are likely considering the services of a tax professional. According to government statistics, those who choose to prepare their own tax return can plan on spending an average of 33 hours to prepare an itemized tax return with interest and dividends. And those using "over-the-counter" tax software will average an additional ten hours. Surprised? When it comes to tax preparation, a tax professional may be the right choice for you.

Professional tax preparers stay current with tax law changes, are familiar with software glitches, and have knowledge about frequently overlooked deductions. Often, consulting a tax preparer not only pays for itself in the way of tax savings, and offers the comfort and security of knowing that your return has been accurately prepared.

To select a tax preparer, first determine your needs. The complexity of your tax return (i.e. such things as the sale of property, investment income, or income from the operation of a business activity) will help you determine what to look for in a tax professional. You will want someone who ensures proper tax treatment, has experience, and can optimize deductions.

Tax professionals can acquire several different designations, each one reflecting different skills. The most recognizable designations are certified public accountant (CPA) and enrolled agent (EA). Both of these credentials require the individual to earn continuing professional education. In addition to CPAs and EAs, there are many tax preparers who either carry other designations.

Also, there are many tax preparers who either carry no designations. While most of these tax preparers are qualified, reputable individuals, be cautious and ask questions. Whomever you choose, ask for and check references. A reputable tax professional will gladly provide references. A check with the Better Business Bureau (www.bbb.org) in your area will indicate if there has ever been a complaint filed against a particular tax preparer.

What else should you look for when selecting a tax preparer? Here's a quick checklist:

• How long has the preparer been in the tax business?

• Do they have experience preparing the type of returns you need them to prepare for you?

• What type of credentials or designations do they maintain? Do they continually upgrade their knowledge through continuing education?

• Does the preparer belong to any professional organizations? Belonging to a professional organization indicates a commitment to excellence in the profession. See www.taxprofessionals.com for a list of those who belong to the National Association of Tax Professionals (NATP).

• Will the tax preparer be available after April 15 in case you have questions or are audited by the IRS?

• What do other clients say about the tax preparer? Referrals from friends and acquaintances are a great source, but references are good too; satisfied customers attest best to reliability.

• Finally, once you have enlisted the help of a tax preparer, it is critical that you check to be sure he or she has signed your return before it is submitted to the IRS.

This article is brought to you by Peter Tuttle, CPA. You may contact me by sending an e-mail via the link to the right of the blog page. Please visit my website at http://www.petertuttlecpa.com/

"I help individuals, families, small-businesses & non-profits with their income tax & insurance needs."

Sell It on eBay and Pay Uncle Sam

Tue, 26 Feb 2008 01:29:25 -0600

Sell It on eBay and Pay Uncle Sam

Many people don't realize the income they earn from auctions and consignment sales may be taxable. If you regularly sell items you own, you might be considered a business owner and not even know it. Are you reporting all your income? The Internal Revenue Service (IRS) wants to know. There are also some exceptions where income can be excluded from taxable income.

All income from auctions, traditional or online (such as eBay and Craigslist), and consignment sales is generally taxable unless certain exceptions are met. This income is usually considered either "business" or "ordinary" income. In certain circumstances such income can qualify for the more favorable capital gain treatment.

Business income resulting from an auction or consignment sale is subject to the same taxes as the income of any other retail or service business. That may include income tax, self-employment tax, employment tax, or excise tax. A retail or service business owner must include this income in his or her business income.

A person must report a gain from a sale whether he or she operates a business or not. A reportable gain is the income above the original cost or basis of the item. These gains may be business income or capital gains.

Generally, you are not required to report income resulting from a garage or yard sale. Why? Because the items you sell are usually sold for far less than what you paid for them. If you hold an occasional garage sale, you are not operating a business, so any loss you have is not deductible. However, there may be exceptions. If an online garage sale turns into a business with recurring sales and purchases of items for resale, it may be considered an online auction business.

An occasional sale of an item that has appreciated in value, such as antiques and collectibles may result in a capital gain. If you sell such items, the taxable gain is the excess of the selling price over your cost. This type of income is eligible for the lower capital gain tax rates.

What's a deductible expense? Traditional or online auction and consignment sellers in business to make a profit can generally deduct expenses that are both ordinary and necessary. An "ordinary" expense is one that is common and accepted in a trade or business. A "necessary" expense is one that is helpful and appropriate for a trade or business. Verifiable auction and consignment fees and commissions are examples of allowable business expenses.

Expenses related to personal, living, or family matters are generally not deductible. These are expenses that are part personal and part business-related. The business portion of the expense is deductible. Here's a simple example. A person might borrow $10,000, using $7,000 for personal use and $3,000 for his or her online auction business. The interest expense on the $7,000 is not deductible but the interest on the other $3,000 is.

Another example of an expense that is commonly split when figuring tax deductions is a person's home when it is partially used for business. That person may be able to deduct expenses for the business use of the home if they meet the regular and exclusive use requirement. However, auction and consignment sellers may compute their deduction to the extent of expenses allocable to space in the residence that is used on a regular basis (does not have to be exclusive) to store inventory and/or product samples if the residence is the sole fixed location of the business. Allocable expenses may include mortgage interest, insurance, utilities, repairs, and depreciation.

Remember, whether you are operating a business or not, the profits you earn are taxable and the government wants its fair share.

This article is brought to you by Peter Tuttle, CPA. You may contact me by sending an e-mail via the link to the right of the blog page. Please visit my website at http://www.petertuttlecpa.com/

"I help individuals, families, small-businesses & non-profits with their income tax & insurance needs."

Avoid Common Tax Return Errors

Mon, 25 Feb 2008 04:24:22 -0600

Avoid Common Tax Return Errors

At the close of each tax filing season, the Internal Revenue Service (IRS) compiles a list of the most common errors taxpayers make when filing their tax returns. Believe it or not, incorrect mathematical calculations are not the number one error. The most frequent culprit for the past several years is incorrect Social Security numbers being submitted on individual income tax returns.

When an incorrect return is filed, the IRS first "rejects" it then sends a notice to the taxpayer requesting additional information. This can delay a refund by several weeks, or even months. In other instances, the IRS may issue a refund to you, but for a lesser amount than what you were expecting. This may occur when a claimed dependent has a missing or incorrect Social Security number, or when another taxpayer claims the same dependent.

Another reason you may receive a reduced refund is if you are eligible to claim a tax credit for child and dependent care expenses but you do not include the Social Security number of your caregiver on your tax return. The IRS will issue your refund, less the amount of the credit. You will then have to file an amended return and wait several more weeks for the rest of your money. All this can be avoided if care is given when entering required information on you return.

Other details to keep in mind when filing your taxes this year include:

• Remember to sign your return in the proper place. If you are filing a joint tax return with a spouse, both of you must sign. If one spouse has passed away during the year, the surviving spouse must sign both names.

• Attach Copy B of all Forms W-2 received during the year to the federal return. Also attach any Forms 1099 that report tax withholding.

• Mail your return to the proper address. The IRS often changes the address for mailing returns. If the IRS sent you a tax booklet, use the enclosed envelope. If you have a balance due, you must use a payment voucher and mail your return to a lock box instead of the service center. If you electronically file your return, the chance of mailing your return to the wrong service center is virtually eliminated.

• Check the accuracy of all the Social Security numbers entered on your tax return. Each person for whom you claim a personal exemption is required to have a Social Security number or some other taxpayer identification number. Make sure the name and number appear just as they do on the officially-issued Social Security card.

• If you owe money this year, make your check payable to the "United States Treasury Service" not the "IRS."

• Double check the tax from the tax tables, as well as all calculations.

• Make a copy of the return for your records.

• Be certain there is enough postage on the envelope. Include your full return address. If you owe, it's a good idea to spend the extra dollars and use certified mail - return receipt requested so there is a record that the IRS received your return.

Taking a few minutes to double check your tax return before you send it to the IRS, whether you mail it or electronically file, will ensure your refund is issued in a timely manner.

This article is brought to you by Peter Tuttle, CPA. You may contact me by sending an e-mail via the link to the right of the blog page. Please visit my website at http://www.petertuttlecpa.com/

"I help individuals, families, small-businesses & non-profits with their income tax & insurance needs."

Ready or Not...Tax Season is Here!

Sun, 24 Feb 2008 01:14:29 -0600

Ready or Not...Tax Season is Here!

Yes, it's that time of year again. A whole year has flown by, making today the perfect time to start preparing for the time-honored tradition of filing your tax return. If you are looking for a tax advisor, contact me by e-mail at the link to the right.

The easiest place to start is by compiling a list of the things you need by looking at the type of income and expenses reported on your return from last year. If your family or employment status has remained the same, last year's return may contain clues to the statements and information you need to watch for this year. After reviewing last year's tax return, bring it with you to your tax appointment. Your professional tax preparer can spot things on the return that you may have overlooked.

Next, gather all the income statements you received. This includes all your Forms W-2, Forms 1099, and Schedule K-1s for taxpayers who are owners of an S corporation or a partnership. A Schedule K-1 is also issued to taxpayers who received income as a beneficiary of an estate or trust. Often, the Schedule K-1 is not mailed until later in the filing season, so if you are expecting one of these, tell your tax advisor, and wait to receive it before you file.

Other income items may include profits from selling an asset, such as stock, your home, or any other property you own. It's important to know how much you paid for the assets, how they were acquired, and when they were acquired. Only the profit is taxable. If you can't determine the cost of an asset, the Internal Revenue Service (IRS) will assume it is zero. This results in the entire gain being taxable, and you will wind up paying more in taxes than necessary.

Be careful not to overlook any medical expenses, property taxes, mortgage interest, employee business expenses, and charitable contributions are the most common deductions. Bring in all the expenses you incurred during the year along with documentation showing when you paid them. If you made charitable contributions of $250 or more at a time to one organization, you must obtain a statement from the charitable organization before your return can be filed. You must also have written documentation (such as receipts or cancelled checks) of all cash donations, regardless of the amount. No longer can you deduct "cash" tossed on the offering plate or in the kettle! Other deductible expenses include moving expenses, casualty losses, and costs incurred for the care of your children while you work.

Whether you prepare the return yourself, or hire a professional to do it for you, being organized pays off. A professional tax practitioner can help you sort through the mounds of paper you have gathered and look for information that will allow you deductions under the new rules.

This article is brought to you by Peter Tuttle, CPA. You may contact me by sending an e-mail via the link to the right of the blog page. Please visit my website at http://www.petertuttlecpa.com/

"I help individuals, families, small-businesses & non-profits with their income tax & insurance needs."

Tips you can use: Economic "Stimulus" 2008

Fri, 22 Feb 2008 23:32:52 -0600

Tips you can use: Economic "Stimulus" 2008 February 22, 2008

I have been fielding calls and e-mails on this subject and thought it would help to provide my overview of what is happening. If you have further questions, contact me or discuss them with your tax advisor during your upcoming appointment.

Late on Thursday, Feb 7, Congress passed the stimulus bill (HR 5140) and sent it to the President for signature. On Wednesday, Feb 13, it was signed into law by the President.

Q 1.) What do you need to do to get a "rebate" check during 2008?

A 1.) File a valid 2007 Federal Income Tax return, with a valid social security number.

Q 2.) How much will I (we) get?

A 2.) Usually, the amount will be equal to your taxable income (Form 1040, Line 43; or Form 1040-A, Line; or Form 1040-EZ, Line 6) up to $600 for individuals and $1,200 for couples filing jointly.

Q 3.) What if I don't have any taxable income?

A 3.) Even those who have little or no tax liability may qualify for a minimum payment of $300 ($600 if filing a joint return) if their tax return reflects $3,000 or more in qualifying income. For the purpose of the stimulus payments, qualifying income consists of earned income such as wages and net self-employment income as well as Social Security or certain Railroad Retirement benefits and veterans' disability compensation, pension or survivors' benefits received from the Department of Veterans Affairs in 2007. However, Supplemental Security Income (SSI) does not count as qualifying income for the stimulus payment.

Q 4.) Who is NOT eligible to receive a payment?

A 4.) Individuals who pay no tax and who have less than $3,000 of qualifying income will not be eligible for the stimulus payment. Anyone who does not have a valid Social Security number, including those who file using an Individual Taxpayer Identification Number (ITIN), an Adoption Taxpayer Identification Number (ATIN) or any other identification number issued by the IRS is not eligible for this payment. Both individuals listed on a married filing jointly return must have valid Social Security numbers to qualify for a stimulus payment. Also ineligible are individuals who can be claimed as dependents on someone else's return.

Q 5.) Will the "rebates" be limited based on my income?

A 5.) It will be phased out for taxpayers earning above $75,000 for singles and $150,000 for married couples filing jointly. You will lose 5%, or $50 of the "rebate" for every $1000 you are over the cap for income.

Q 6.) Will I get more money because we have three young children?

A 6.) To qualify for $300 per child, a child must be eligible under the Child Tax Credit and have a valid Social Security number.

Q 7.) What if I don't file in 2007?

A 7.) You will not get a "rebate check during 2008.

Q 8.) How is the "rebate" check tied to next years income tax return?

A 8.) The actual credit will be calculated on your 2008 return, and if you're due a higher credit, you'll get the remainder when you file your 2008 return. If you received a higher credit than you should have, you do not have to pay anything back.

Q 9. ) When will the payments be made?

A 9.) Starting in May, the Treasury will begin sending economic stimulus payments to more than 130 million individuals. The stimulus payments will go out through the late spring and summer.

Q 10.) Are there other provisions to this law?

A 10.) This legislation also offers incentives to spur business investment. The legislation would save businesses approximately $50 billion in near-term taxes through a temporary change to the tax code that will allow American businesses that buy new equipment this year to deduct an additional 50 percent of the cost of their investment in 2008. This will encourage businesses to expand and create new jobs now because buying equipment, software, and tangible property this year will dramatically lower their taxes.

The legislation also increases expensing for small businesses. This means that a business placing less than $800,000 of equipment into service this year would be able to immediately deduct up to $250,000 - up from $128,000 - of its investment in 2008.

Other Comments:

Special Circumstances for Recipients of Social Security, Railroad Retirement and Certain Veterans Benefits

Individuals who receive Social Security benefits, Railroad Retirement benefits and certain veterans' benefits may have to follow special filing requirements in order to receive the basic amount:

Those who have already filed a 2007 return reflecting qualifying income of $3,000 or more do not have any additional filing requirements and do not need to do anything more to receive their payment.

Those who have already filed a 2007 return showing less than $3,000 in qualifying income and did not list their Social Security, Railroad Retirement or certain veterans benefits should file a Form 1040X to list those non-taxable benefits and qualify for a payment - if it will put their income above $3,000.

Those who are not required to file a 2007 return but whose total qualifying income including Social Security, certain Railroad Retirement and certain Veterans benefits would equal or exceed $3,000 should file a return reporting these benefits on Line 14a of Form 1040A or Line 20a of Form 1040 to establish their eligibility. Please note the form lines just mention Social Security, but use these lines even if your only benefits were Railroad Retirement or veterans' benefits.

Notices

Most taxpayers will receive two notices from the IRS. The first general notice from the IRS will explain the stimulus payment program. The second notice will confirm the recipients' eligibility, the payment amount and the approximate time table for the payment. Taxpayers will need to save this notice to assist them when they prepare their 2008 tax return next year.

Anyone who moves after they have filed their 2007 tax return should notify the IRS by filing Form 8822, Change of Address, and also notify the Post Office.

Sources:
http://www.whitehouse.gov/news/releases/2008/02/20080213-5.html
http://www.irs.gov/newsroom/article/0,,id=179095,00.html

This article is brought to you by Peter Tuttle, CPA. You may contact me by sending an e-mail via the link to the right of the blog page. Please visit my website at http://www.petertuttlecpa.com/

"I help individuals, families, small-businesses & non-profits with their income tax & insurance needs."

TIPS YOU CAN USE: Understanding your Homeowners Policy and Auto Policy

Thu, 21 Feb 2008 15:25:20 -0600

Properly understanding your insurance policies is a must. While we realize
that an insurance policy may not make for exciting reading, you need to do it, and we have
several resources available to help you understand what your homeowners
and auto policies do and do not cover.

Let's take a quick look at the homeowners policy. It provides four primary
property coverages.

* The dwelling
* Other structures, like a fence or detached garage
* Personal property
* Additional living expense, in case you have to move out of your home
after a loss

The homeowners policy also covers your liability in case someone is
injured on your property.

Your personal auto policy covers your liability in case you injure someone
or damage their property in an auto accident. It also covers medical
expenses you incur as the result of an accident, damage to your own
covered vehicles, and injuries you sustain in the event that an uninsured
driver hurts you.

As mentioned, we have several resources available to help you better
understand your policies. Please call or stop in and we will be glad to
share that information with you.

This article is brought to you by Peter Tuttle. You may contact me by sending an e-mail via the link to the right of the blog page. Please visit my website at www.CoolSpringsInsurance.com/

"I help individuals, families, small-businesses & non-profits with their income tax & insurance needs."

TIPS YOU CAN USE: KIDS, CARS, AND CAR SEATS

Thu, 21 Feb 2008 00:51:12 -0600

According to NBC News, about 340 children have died from being left
unattended in a vehicle in the last 10 years. Such tragedy does not have
to happen; it can be avoided. Here are some suggestions you might want to
incorporate into your daily routine if you have small children in your
car.

- Put something you'll need like your cell phone, handbag, lunch, or
briefcase on the floor in the back seat.

- Get into the habit of always opening the back door of your vehicle every
time you reach your destination.

- Ask your child's day care provider to phone you if your child doesn't
show up when expected. Many children's lives could have been saved by a
telephone call. Give childcare providers all phone numbers, including
those of family members or friends.

- If you see a child alone in a vehicle, call 911 immediately.

- Keep a large teddy bear in the child's car seat when it's not occupied.
When the child is placed in the seat, put the teddy bear in the front
passenger seat.

Remember that driving a car is the single most dangerous thing we do each
day. Always be sure to use an age-appropriate car seat when you have a
small child in the car.

And, although flying on a scheduled airliner is certainly safer than
riding in a car, don't forget the car seat if you are flying with your
little one.

If you don't have -- or cannot afford -- a car seat, there are several
agencies that can help. Please call our office and we will put you in
touch with the right people.

This article is brought to you by Peter Tuttle. You may contact me by sending an e-mail via the link to the right of the blog page. Please visit my website at www.CoolSpringsInsurance.com/

"I help individuals, families, small-businesses & non-profits with their income tax & insurance needs."