Eight Tax-Time Errors to Avoid

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If you make a mistake on your tax return, it usually takes the IRS longer to process it. The IRS may have to contact you about that mistake before your return is processed. This will delay the receipt of your tax refund.

The IRS reminds filers that e-filing their tax return greatly lowers the chance of errors. In fact, taxpayers are about twenty times more likely to make a mistake on their return if they file a paper return instead of e-filing their return.

Here are eight common errors to avoid:

1. Wrong or missing Social Security numbers. Be sure you enter SSNs for yourself and others on your tax return exactly as they are on the Social Security cards.

2. Names wrong or misspelled. Be sure you enter names of all individuals on your tax return exactly as they are on their Social Security cards.

3. Filing status errors. Choose the right filing status. There are five filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household and Qualifying Widow(er) With Dependent Child. See Publication 501, Exemptions, Standard Deduction and Filing Information, to help you choose the right one. E-filing your tax return will also help you choose the right filing status.

4. Math mistakes. If you file a paper tax return, double check the math. If you e-file, the software does the math for you. For example, if your Social Security benefits are taxable, check to ensure you figured the taxable portion correctly.

5. Errors in figuring credits, deductions. Take your time and read the instructions in your tax booklet carefully. Many filers make mistakes figuring their Earned Income Tax Credit, Child and Dependent Care Credit and the standard deduction. For example, if you are age 65 or older or blind check to make sure you claim the correct, larger standard deduction amount.

6. Wrong bank account numbers. Direct deposit is the fast, easy and safe way to receive your tax refund. Make sure you enter your bank routing and account numbers correctly.

7. Forms not signed, dated. An unsigned tax return is like an unsigned check – it’s invalid. Remember both spouses must sign a joint return.

8. Electronic signature errors. If you e-file your tax return, you will sign the return electronically using a Personal Identification Number. For security purposes, the software will ask you to enter the Adjusted Gross Income from your originally-filed 2011 federal tax return. Do not use the AGI amount from an amended 2011 return or an AGI provided to you if the IRS corrected your return. You may also use last year’s PIN if you e-filed last year and remember your PIN.

For tax needs feel free to contact us at 314-993-4285.

Tax Return Forget Me Nots

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Before you submit your tax documents to your accountant for completion of your tax return, take a look at the top 5 most commonly overlooked items below to make sure you’ve included everything:

1. Long term care insurance:  Missouri allows for a deduction from taxable income for a portion of your long term care insurance. Many other states allow a deduction or sometimes a tax credit for these premiums.  Although this is one of the questions in the full version of the organizer, because we are so conditioned that medical expense is limited to 10 % of AGI, we forget that the state may allow for some benefit of these itemized deductions. Long term care insurance should be included on your return to take full advantage of this opportunity.

2. Electronic 1099s:  Many brokerage firms now have the option of sending your 1099s directly to your CPA.  All firms are different, but you may be able to save our email address as your CPA in your brokerage online account and have the 1099s securely emailed to us when they are ready.

3. Business expenses and AMT:  The top marginal tax rate is now 39.6%.  This could mean you are out of the Alternative Minimum Tax (AMT) now or will be in the near future.  While you were not deducting any unreimbursed business expenses while in AMT, now you could deduct them.  If you do not track and send them to us, you will not deduct them.  Remember to send us all business expenses (including mileage driven) with your tax documents so you are not missing out on these deductions.  Also, although there are a few states that do, most states do not have AMT so your expenses would be deductible on the state side even if you are still in AMT so go ahead and send everything to us even if you think you will be in AMT.

4. Non Cash Charitable Donations:  Donating items to charities such as the Salvation Army or Goodwill can save you substantial tax.  Websites such as www.itsdeductible.com and www.satruck.org/valueguide give the approximate values of used furniture, clothing, or appliances.  They make what used to be a difficult process, tracking values of donated items, easy and it will save you real money.  Many times, the values these websites give for items in good condition are higher then you may expect.

5. Charitable Mileage and Supplies:  If you use your vehicle for charitable organizations, you can deduct these miles as charitable donations.  If you purchase supplies on behalf of a charitable organization to use at an event, these are charitable donations.  There is a place on your organize for each of these items so remember to include them if they apply to you.

Thanks for allowing the HKA family to work with you again this year on your 2013 tax returns.  If you are not currently a client and wish to learn more about us and what we can do for you, please click here.

Ten Things to Know about Farm Income and Deductions

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If you earn money managing or working on a farm, you are in the farming business. Farms include plantations, ranches, ranges and orchards. Farmers may raise livestock, poultry or fish, or grow fruits or vegetables. Here are 10 things about farm income and expenses that the IRS wants you to know.

1. Crop insurance proceeds. Insurance payments from crop damage count as income. They should generally be reported the year they are received.

2. Deductible farm expenses. Farmers can deduct ordinary and necessary expenses as business expenses. An ordinary farming expense is one that is common and accepted in the farming business. A necessary expense is one that is appropriate for that business.

3. Employees and hired help. You can deduct reasonable wages you paid to your farm’s full and part-time workers. You must withhold Social Security, Medicare and income taxes from your employees’ wages.

4. Items purchased for resale. If you purchased livestock and other items for resale, you may be able to deduct their cost in the year of the sale. This includes freight charges for transporting livestock to your farm.

5. Repayment of loans. You can only deduct the interest you paid on a loan if the loan proceeds are used for your farming business. You cannot deduct interest on a loan used for personal expenses.

6. Weather-related sales. Bad weather may force you to sell more livestock or poultry than you normally would. If so, you may be able to postpone reporting a gain from the sale of the additional animals.

7. Net operating losses. If deductible expenses are more than income for the year, you may have a net operating loss. You can carry that loss over to other years and deduct it. You may get a refund of part or all of the income tax you paid for past years, or you may be able to reduce your tax in future years.

8. Farm income averaging. You may be able to average some or all of the current year’s farm income by spreading it out over the past three years. This may lower your taxes if your farm income is high in the current year and low in one or more of the past three years. This method does not change your prior year tax. It only uses the prior year information to figure your current year tax.Things to Know.

9. Fuel and road use. You may be able to claim a tax credit or refund of federal excise taxes on fuel used on your farm for farm work.

10. Farmers Tax Guide. More information about farm income and deductions is in Publication 225, Farmer’s Tax Guide. You can download it at IRS.gov, or call the IRS at 800-TAX-FORM (800-829-3676) to have it mailed to you.

Purchase Real Estate with A Self-Directed IRA

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It is a known fact that you cannot use your Individual Retirement Account (IRA) to invest in real estate.  Although this is true with a traditional 401(k) or traditional IRA, you can invest in real estate through the use of a self-directed IRA.

A self-directed IRA is an IRA like any other under IRS guidelines in terms of annual contributions, required minimum distributions, and types such as Traditional, ROTH, Simple, and SEP.  While most traditional IRAs limit your investments to publicly traded securities, self-directed IRAs are open to almost any investment, except for life insurance, collectibles, and S-Corporations.

Below are some key points you should review before you decide to use your self-directed IRA to purchase real estate:

  1. The property must be a new purchase directly into the IRA and cannot be a property you already own or a personal residence.
  2. You must have enough cash to purchase the property.  You cannot take out a mortgage in your IRA to finance the purchase.
  3. You cannot borrow money from the property or use it as security for a loan.
  4. You and your relatives are barred from occupying or working on the property.  If you are considering renting the property, you need a property manager to find tenants and all expenses for repairs and improvements must come out of the IRA.

While it is possible to use a self-directed IRA to purchase real estate it may become more complicated to manage its use than if it were purchased and operated outside of the IRA.

Feel free to give us a call if you have any questions or want to discuss this further.

HKA reports high scores in recent employee satisfaction assessment

Hauk Kruse & Associates cares about their employees.  In January, Jan Stapleton, Certified Life Coach, RN, BSN  worked with the staff at HKA utilizing “The Circle of Life” curriculum.  The Circle of Life philosophy, was established by Rebecca McLean and Roger Jahnke in 1997.  The study materials teach the participant(s) to hone in on their own circle of life which includes assessment of one’s life, and readiness to develop and execute your blueprint for change.  This cyclical process is intended to be infinite and allows the participant to re-assess and redirect their plan of action as their lives and life goals move and shift.

The first portion of the class is to perform a “Circle of Life Assessment” which allows the participant to select their personal and professional strengths and opportunities.  The strengths are shared with the rest of the staff in a group setting.

A highlight from Jan’s session was the results of the company satisfaction assessment.  All employees were asked to provide a rating from 1-10 on ten different attributes exhibited by the HKA.  Here were the results:

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It is no coincidence that these ratings have increased significantly over the past 2 years.  Bill Kruse, Managing Partner of HKA defines the reasons behind the increase in satisfaction below.

For more information on the HKA Family Practice, please click here and for more information on Jan Stapleton and how Real Steps Life Coaching can help you and your team, please click here.

HKA Year in Review- Spotlight on Chameleon Club Grand Opening in Saint Louis

The HKA team joined in on the fun for the grand opening of The Chameleon Club on October 24th. The club and cigar bar was bustling as new club members, friends and colleagues sipped wine and enjoyed the beautiful ambiance on the main floor of the club inside the historic “Barnett” building just off of Washington Avenue in downtown St. Louis. The upstairs of this breathtaking building also acts as the headquarters for Chameleon Integrated Services who is led by the CEO and Partner, Jeff Kelley.

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Click Here to Visit Chameleon Integrated Services
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Wine Tasting at Chameleon Club Grand Opening.

The private club is currently sponsoring a warm clothing drive for charities in saint louis. They are also performing open membership enrollment throughout the month of December. Membership includes valet parking and club amenities such as music, entertainment and events as well as entry into the coveted “Barnett Room” for the ultimate cigar smoking experience. We wish Chameleon Integrated Services and the club much success in their new endeavor.