TAXES! TAXES! TAXES!

A relatively short post this week.  It is the “end run” of tax season.

I managed to finish the last two returns for clients on Monday - out in the mail to then on Tuesday - whew!  One of them was a 2015 return for a friend of mine.  If she does not have it in the mail by Monday she will lose her refund.  Just a reminder - if you have been procrastinating and haven’t filed your 2015 return yet - you will lose your refund if you don’t file it by Monday (April 10, 2019).  If you owe taxes though - the various governments will keep trying to collect it - so file your return also.  Filing your late 2016 or 2017 returns is a good idea too!  Also it always best to file the current return - 2018 on time!  If you can’t finish it in time apply for an extension of time to file - Form 4868 from IRS, state forms vary by state.  This does not give you extra time to pay your taxes -so if you will owe taxes, try to estimate how much and send the payment along with the extension.

I have the two hardest returns left to do - ours and our little corporation.  I more or less finished ours today.  I will wait to clear to my head and check it over tomorrow and then print it out. 

Now that our return is done I can do our corporation return - some items are paid from our personal accounts for the corporation - and I have to figure out the cost of the use of our van for the corporation (which is why I have to do ours first).  Barring some strange occurrence -which if you read my posts regularly you will know we have had a lot of lately - I should have both returns finished, printed and ready to be signed and mailed in plenty of time.

Only one problem remains.  As mentioned we pay for some items from our personal accounts - particularly since the corporation does not have a credit card or have much money (I never said it was a successful business).  I have to keep track of what we paid for the corporation and sometimes what the corporation paid for us (it has an online payment account and we don’t so for rare online payments we sometimes use the corporation’s account). 

The amounts paid out by us for the corporation and paid out by the corporation for us should be the same (in reverse) on both sets of “books”.  They are not.  I spent all of last night looking for the error(s) and could not find them.  So as soon as I post this I will be back to trying to figure out what is wrong.   It is more than one error as I searched the books on both ends for the amount I am out and it does not exist.





And while writing this and working on our taxes - I am also doing the laundry!

THOUGHT FOR THE WEEK -
Remember get your income taxes done - now - don’t procrastinate.  You will be glad you did whether you get a refund or you owe you money and won’t have to pay late fees and interest if you file on time.

INCOME TAXES ARE DUE IN A MONTH

Here in the US it is that time of year again - tax season.  This year there is even more pressure due to the changes in the tax law and the resulting changes in tax forms.  (If you are here in the US and you have not seen the new forms - they are small, at least for the 2 main pages.)   Some of you may find that your taxes are lower - others will find that they are higher - and I don’t mean your refund, I mean your actual taxes.  Don’t forget, you have an actual tax amount that is calculated by filling in your tax form, then subtracting from that amount the amount you prepaid during the year - through withholding and/or payment of estimated.  So if one’s withholding, say from one’s paycheck - the common thing from which most people have withholding taken - is more than it has been, one will either be overpaid more than usual and get a refund or owe less than usual and pay in less - but one’s actual tax - the total of the amounts withheld, paid as estimates and any amount due (or less any amount withheld) is your actual tax amount.  Does that make sense?  Due to the changes many people will have had less withheld from their paycheck  - so if their tax is the same as last year’s - they will either owe more or receive less as a refund, even though their tax is the same.

Supposedly most people will be paying less in actual tax (the total mentioned above), but many will not.  A client of mine is retired and in the past paid no income tax due to high itemized deductions.  This year due to the changes I estimate that his poor man will be paying around $600 in taxes.  IRS has an online calculator to check one’s withholding and I had used it during 2018 to check all of my clients (and my) taxes with it, and this calculation is done using same. 

He is retired.  His income is almost entirely Social Security.  His deductions should be the same as last year.  How come his taxes are higher than before?  Well, the information about the changes left out some things - one of them is that is in past years each person was entitled to a personal exemption of (in recent years) just over $4000.  They were eliminated in the changes.

What does this mean?  If one has always filed using standard deduction then one was entitled the standard deduction plus a personal exemption for themselves plus same for each person they were taking as dependants, plus their spouse (on the same return filing jointly or their own return if filing married separately).  So a couple was entitled to exemptions totaling $8000, a family of 4 was entitled to exemption totaling $16,000 and those exemptions no longer exist.  If one is taking the new standard deduction and one is single with no dependants than their new standard deduction is more than last year’s standard deduction plus exemption , but if they have any dependants - such as a single mom with a child, it is less than same was.  Similarly, a couple with no dependants will find that the new standard deduction for same is more than the old standard deduction plus their 2 personal exemptions totaled, but if they have additional dependants - children and/or elderly parent for example - the new standard deduction will be less than the old one plus their personal exemptions were.

Now, if one has been itemizing deductions they were also entitled to the personal exemptions, and are no longer entitled to same, but since they listed their actual deductible expenses they do not pick up anything additional to replace their lost personal exemptions.  In addition a variety of items which were deductible in the past in a category of “other deductions” if the category was more than 2% of their income are no longer deductible.  Depending on where they live they may also be losing part of their state income tax/real estate deduction.  Now, it is possible that the new standard deductions might be higher than their itemized deductions and they can take same as deduction, but chances are that even if this is the case, it will still be less than they were able to deduct last year as itemized deductions plus personal exemptions  - whether they have other dependants or not. 

So, this year make sure to gather your related tax papers - W2 forms, assorted 1099 forms, forms from any other income you have - such as K1s and records of other any other income you have to list.  Then make sure that you have all of your deductions - medical (insurance premiums, copayments, deductible payments, doctors, prescriptions, etc. ), taxes - real estate, state & local income taxes (still allowed up to $10,000), interest on your mortgage, and charitable contributions.  (Medical is still limited to same in excess of a certain amount).  Make sure that you check carefully with your tax preparer as to what else you should include this year.  Don’t wait until the time to file is about to approach (only just over a month left) in case you have any questions or find that you need to come up with money to pay income taxes that you did not anticipate paying.  If you due your own returns - leave extra time to figure out the new forms.  There are some programs that will help one prepare their taxes (free) if you need help including one called VITA from IRS that uses volunteers to help people.

Your state income tax forms may have been changed also as a result of the Federal changes.  The state I live in has traditionally used the Federal return information as a start and one then made changes to it.  This year those changes include allowing some of the items no longer allowed on the Federal return (such as real estate taxes in excess of $10,000) and will have extra forms to fill in for same also. 

And this is a good time to decide to do better to have your paperwork organized for next year when tax season comes again.


Past posts on income taxes that may be of interest to you -
http://wheredidileavethat.blogspot.com/2016/03/gathering-papers-for-income-taxes-part-1.html
http://wheredidileavethat.blogspot.com/2016/03/gathering-papers-for-income-taxes-part-2.html
http://wheredidileavethat.blogspot.com/2017/04/holidays-and-taxes-unrelated-subjects.html
http://wheredidileavethat.blogspot.com/2018/02/income-taxes-are-here-again.html

THOUGHT OF THE WEEK -

Take the time to put together your tax papers properly and completely now, while there is time to find missing information or get it replaced.  If you have someone do your income taxes - contact them soon about having your taxes done.  If you do your own - leave extra time this year to figure the changes that have been made and how they affect you. 

As you put together the paperwork - think about what you can do to make next year’s taxes either
 to do.

Again, this is general information and not tax preparation information related to you.  Check with your tax preparer about your specific information needed. 

ARE YOU CHECKING THE FORMS COMING IN WITH INCOME, ETC. TO DO YOUR INCOME TAXES?

I was reminded yesterday that one should always check the forms that come in with income, etc.at the year end to help you prepare your income taxes.  I am sure you understand what I mean all the W2, assorted 1099s maybe some K1 forms...    NEVER ASSUME THAT EVERYTHING IS OKAY UNTIL YOU CHECK THE NUMBERS!

I thought that I was doing well, doing as I always do.  I use a bookkeeping program all year, so all I have to do is compare the totals for the year as I always do - well maybe.  Husband has an IRA at each of 2 credit unions.  (Credit unions function like banks, but the depositors own it.  Originally they were “affinity” organizations - one had to work for a certain type of company or live in a certain area to “join”; they are now allowed to have people joined who are not members of a limited group.)  We have been making withdrawals as we need to supplement our other income from one of the two credit unions - we like the other one better and the other one has slightly better interest rates. Last year, however I noticed that the IRA money in the other as his account had gone over the insured amount, so we took money from it once last year.  I keep on eye on what we might need and will have husband transfer money from a CD (fixed time saving certificate of deposit) in the IRA into a savings account in the IRA so that we always have some money not in a CD that we can go in and make a withdrawal from that account - we do this as if we withdrew money from a CD not when it renews there would be a bank penalty.

To protect the (not really) “innocent” I will refer to the credit union that we have been withdrawing from over the years as “Union A” and the other one - the one we like and just started withdrawing from - as Union B or none of this will make sense. 

For those of you not in the US - Individual Retirement Accounts (IRAs) are so that people who work and do not have a pension at work can set aside money for retirement.  I will not go into all of the details of same as you will all have headaches if I do - but basically one must be 59.5 years old or older to take out money without an IRA penalty and one pays income taxes on the money one withdraws.  The IRA can also be used if one had a pension and leaves work by one having the pension money transferred (rolled over) into a IRA (at bank, credit union. stock broker and a variety of other financial institutions).  In our case, husband’s IRAs are the rollover of his pension when he quit his job.  (This is not something called a Roth IRA - which I will not go into explaining as it has no relation to any of this.)

As an accountant I consider myself good at keeping track of our money.  Every bank statement is timely reconciled - including those for the IRAs.  I also have a (very) small IRA at Union B as I had no pension.

When the year end forms showing the income (withdrawals from) from husband’s IRA at Union
 A arrived, I looked at the amount of income (withdrawals) it showed for the year and compared it to the total in my bookkeeping software and it matched.  Remember, through 2017 we had only made withdrawals from the Union A IRA. 

Well, yesterday the paperwork arrived from Union B and I went to check it against the total in my bookkeeping software and I realized something was wrong - MAJOR WRONG.  The Union B form showed that he (we) had withdrawn three times as much as I showed we did.  Then I remembered that the entire amount withdrawn on my software was the same as what was withdrawn from Union A. I pulled out the year end Union A paperwork to figure it out. 

Remember I said that we transfer money within the IRA at Union A and also within the IRA at Union B (each credit union separately - not between the two IRAs)?  Somehow both credit unions had made a mistake in a transfer within the IRA at that credit union.  The paperwork from Union A had looked right as the amount transferred within same (from CD to savings account) happened to be equal to the withdrawal we made at Union B.  The form from Union A actually showed several thousand dollars more than we had actually withdrawn. 

At Union B we had gone in and taken money during the year (as I said, just happened to be the same amount as the transfer at Union A) and at the same time - on separate paperwork - we had transferred money within that IRA into the IRA savings account at that credit union.  So - it was by chance that the paperwork from Union A looked correct when it was not.  At Union B we had transferred twice as much as we had withdrawn - hence, since the same sort of error was made there - the paperwork showed that we had withdrawn 3 times as much as we did.

So today - after a quick “fun” stop at the doctor for followup blood test - we drove to Union A.  We went there first as in general they don’t always seem to know what they are doing and there was no paperwork for the transfer there - only a withdrawal and deposit slip.  As we thought about it and looked at the paperwork I did have, we remembered the problems the day we transferred (or thought we transferred) the money.  We had gone to the branch of Union A we normally go to - a small branch closer to us than the main branch.  There has been a very nice and competent employee there that would we wait for.  She was not there.  The fellow who was there did not have any idea what he was doing and we left and went to the main branch.  In the main branch they were having a “summer beach party” theme event (banking is not suppose to be fun - it is business).  I did not have a business card from the employee - who seemed competent at the time - and had written his name down as he did not have one. I remembered when thinking about it that it had all seemed too quick. 

When we went in today I asked for a manager or supervisor and was questioned at the reception desk as to why I needed one and told that any of the employees can do that - I told the woman at the desk, we preferred to deal with a manager to do this.  An employee came out - based on where she had come from I knew she was not a manager.  When we shook hands I asked what kind of manager she was - she was not and I repeated my request, which again, she tried to talk me out of.  We eventually met with the assistant manager. Luckily she understood and she was able to correct the error.  We are to get new paperwork - both the required paperwork for our income taxes showing the amount he received for the year and we also requested a new “summary statement” as we will need that later in year to apply for the real estate senior deduction (the one seemed not to have arrived at the township back in December).  Hopefully we will have correct copies of both in about a week. 

Oh, this manager said something that no one should every say about their business to a customer.  I had told her that we have not been happy with the credit union in general  -“Really?  How come you have not moved your account elsewhere then?”  Instead of “I am so sorry to hear that - what can we do to make it better for you?”  (Which husband basically told her - employees need better training in IRAs and don’t have event parties.”) She basically suggested to us that we should not bank with her credit union and we should move our money elsewhere!

We then drove to Union B.  I was not as concerned about dealing with the problem at same as the employee ( a very good one that we ask for when we go in) had filled in the form to have this processed correctly - it just had not been done correctly by whoever processed it.  What a difference!  We asked to speak to a manager. Other than being offered someone else to help as the manager was with a customer, there was no question about us speaking with her.  When we speaking she commented (in reference to something said) “Some customers just like to stop in and say hello to me.” 

She corrected the error - and apologized it for it.  She could not get us a replacement summary statement for the year.  She came up with an idea and printed out each account for the year, stamped it with the bank’s rubber stamp and signed it as an alternative.  So much more pleasant and not at all adversarial as the other credit union had been!

Hopefully this all is resolved now other than our receiving the amended forms.  I have now decided that whatever is going on and making us redo things a second time is some sort of curse and I don’t know where it came from or how to get rid of it.

THOUGHT FOR THE WEEK -

When you get financial papers - make sure they are correct.  Always reconcile statements.  Do the math to make sure that those W2, 1099, etc  forms to prepare your tax returns are correct - do the math.  We have not had a problem before - but this year we had two problems from 2 separate sources. 

Check things when you receive them.  Some banks will not correct statement errors after the month you receive the statement.  In this case if I had put these papers aside until I was ready to do our taxes - instead of checking right away - in addition to being concerned about getting them corrected, I might be facing a tight deadline to get them corrected to file our return.  Keep the assorted slips and papers you receive when making a deposit, transfer or withdrawal.  The more paperwork you have to back up your side if there is a problem - the better off you are - even if you scan the papers into the computer to keep them there. 

Start now keeping things organized for your 2019 taxes due in April 2020.  No - really - start now as papers come in.  I have a folder in my paid bills accordion holder marked “1099s”. Anything I receive during the year that is a form like this I toss in this folder.  I also have folders for our car and our van (both are partially business expenses) - I put receipts for cash paid for either, plus the invoices from the mechanic, etc for either, in the appropriate folder.  There is also an “accounting” folder for receipts for cash paid for same also - including receipts for parking and for subway fares when I go to clients.  At the end of the year all these folders - except the “1099" are pulled out and put in a holder I have for clients (and us) that holds the papers for taxes.  This lets me start putting in the new year’s receipts (took out 2018 papers, now can use for 2019 papers).  The “1099" folder still holds items for 2018 right now as they are coming in the mail and it is extremely rare to receive any of these forms for the current year this early in the year. 

TAX SEASON OVER AT LAST - GLAD I WAS ORGANIZED

Well, somehow I managed to finish the tax returns for my clients and us - I never understand how it always gets done.  I actually finished early enough to work in a day trip to Lancaster, PA on Friday. 

Okay, I know sort of how I get it done - Organization!.  Well, also there are a lot less returns than there used to be.  I have an organized system for working on them.  I even print a form for each client on which I summarize the information before I start the return.  This lets me double check that I have entered the information in the program for the returns correctly.  (If, say the amount of interest income on the summary sheet does not match what is to be on the return - one of them is wrong and I have to figure out which.)  I print them out in the same manner each time.  I also make a pdf file of the client’s completed returns, any hand written info pages from the client, anything that showed withheld taxes (such as a W2) for the client, any extra pages I wrote up (sometimes there are a lot of some item and I list it on “columnar paper” - that’s the funny paper with number columns that accoutants use - and then add it up and put the total on the summary page - I also use the back of the summary pages for shorter, simpler listings), and then the summary page - front and back.  My paper copy of the client’s return is stapled together with all of these same items and put into my “to file” holder for next year.  Now, since I scan in everything I needed and did, as well as the return, after I finish the return I shred last year’s paper copy.  What?  Shred it?  Don’t I need to keep it as an accountant?  I have the scanned copy and I keep that - it takes no space other than on a computer disk.  I only keep the paper copy through the next year’s return to help me prepare the next year’s return.

The organization is important as I may be working on several returns at the same time.  Clients send me their info - but sometimes they are missing information either because they forgot to include it or they have not yet received something and wanted to get the rest of the information to me in the meantime.  By being organized and having a summary sheet to match up everything to (and checking last year’s return) I can pick up again if I need to stop and then go back to work on  a return.  Last year’s return helps (which is why I keep a paper copy for the year) as generally people have the same items year to year.  You know, if they had wages one year, chances are they do the next year.  If they had interest from the XYZ bank one year, chances are their bank account is still there the next year.  If they had his and hers statements from a broker - well, they should again next year.  If I find something missing compared to last year, unless the client let me know about it, I know to check for missing information.  

Oddly logic is important also in this organization project.  If a client has, say, a business from their home, not only will a missing amount for their business phone costs pop up when I compare this year to last, but it only makes sense that they would have some expense for using a telephone (of some sort) for their business.  A client who works online has to have Internet service and maybe some other related costs. 

Now despite the organization and being caught up enough to take a day off, I still did not finish until late Sunday afternoon.  I knew I would be able to finish and so took for the day.  I did end up with a small problem.  A client who is a good friend moved to another state and I had not a return from that state in over 30 years.  Their return was finished mostly, but I needed one tiny piece of information that I had not known I would need.  I needed to know their school district. (This is something some states require, most do not seem to based on the returns I have done.)  The name of their community matched one of the school districts, but I know that there still can still be a difference.  (I live in a community that has a school district, but since I live just into the district, my house is in the next community’s school district.)  So I had to set the return aside until I was able to contact them, they checked, and got back to me.  It was a different district, so I was glad I waited.  I prepared and filed extension forms for them and at the same time I mailed out the extension forms, I mailed their returns to them, they owed no taxes - the extensions were only to cover that they would not have the returns to mail out on time.

Now I have to catch up.  Anything that was not important was set aside.  (Please note that YOU are important as my posts went out timely.)  I set up a file folder on top of my paid bills holder and put anything that came along into the folder.  Three bills.  A stack of bank statements for us, our reenacting unit, and my embroidery guild chapter.  RV insurance policy.  You know the stuff I mean. 

Bills were timely paid while dealing with doing the returns due to them being in order in the wall holder next to my desk - and I made sure to note that of the three bills set aside, the earliest one was due to be mailed out on April 20. 

I kept on my email that was of importance.  The lesser emails - this store or that - I deleted.  I get emails from a chat group and they sat unopened until yesterday when I opened all of them and dealt with them.

Dishes and laundry were kept cleaned on schedule. 

On Monday afternoon I mailed out our returns and the items for the above client.  I then came home and wrote up my treasurers report for our reenactment unit’s meeting that night. (And went to the meeting that night.)

So yesterday, Tuesday, I finally started catching up.  I reconciled 6 bank statements - most from the 2 groups I am treasurer of.  I caught up on the chat I mentioned above and got to see photos of 2 lovely crocheted squares from one of the other “chatters” and hear about weather problems of the 2 weeks and a miniature kit one of the others was assembling. 

Today we went food shopping - yes, everything gets short shrift during the height of tax season. 

I should explain that I am the daughter of 2 accountants.  I grew up with tax season the same as I did with the seasons of the year or the holidays during the year - it was something that occurred at the same time every year.  My dad would let me “help” with the photocopying - back when this was a relatively new thing and copies came out wet and had to be hung to be dried.  No computers, of course.  So it is a part of my life.  My husband took many years to be accustomed to the idea of a period of a couple of months in which life basically stops - more so towards the end of tax season - for work.  He knows now how it will all unfold. 

THOUGHT OF THE WEEK -

If you have not filed your tax return yet, I hope that you have filed an extension and you get it prepared as soon as possible - remember it is only extension to file, not to pay and you could end up with interest and penalties if you owe money. 

If you did file your return and are getting a refund - how about using it towards paying off bills or putting it in the bank towards having savings?  If you owe money and couldn’t pay it - pay it as soon as you can to save to on penalties and interest which can add up quickly.

Start now to set up a system to be able to figure out what you will need to have for next year’s tax returns and organize a way to save the paperwork so you will have an easier time next year.  (I am going to send to IRS and our various medical related providers/insurances in a month or so for some printouts we will need to apply for a low income/senior real estate tax exemption, so when the paperwork for that arrives next August, I will be able to do the forms right away and get them done and out as I will have all that I need in advance and I already have a folder set up to keep them in.)

For those of you in other countries with different income tax systems - I am sure that you have paperwork you need also at the end of the year and need to have it organized to find it all easily.
   
As I always say when I write about taxes - this is not tax or legal advice.  Everyone is different and you need to check with whoever does your income taxes as to what YOU need to keep and what YOU need to do.

TAX DAY PANIC SETTING IN

Well, Tax Day is coming up on Monday.  Even though this year it is on April 17 instead of the 15th , I still have work to do.  In case anyone has forgotten, I am an accountant so I am not just talking about our own return.  I should remind you - if you cannot file in time, file an extension!

In the past week and a half I have done and mailed out 4 tax returns to clients and also sent estimated taxes for 2018 to another - very estimated they are based on his 2016 returns, so it does not show his 2017 income and deductions and I have no idea of how the change in the tax law will end up affecting him.  (I did use the calculator at IRS’s website to calculate what his tax will be.)  In addition he has had a life change so his taxes will be filed totally different for 2018 than prior years.  I will adjust it when I do his return - he always gets an extension.  I have another return sitting here 99% done, but needed one tiny piece of info that I am waiting for and this will be an extension also, as the return will not get to the client until after tax date just due to the distance to the client after I finish it.   I also finished our corporation return and it is ready to be signed, paid and mailed.     

This sounds good - 4 gone, 1 almost done which will be on extension and another one also to be on extension and our corporation return done also.  Lots of time to do our return right?

Ummm, Saturday I had a call from a client whose taxes had been mailed to her the Monday before  - “Where are they?”.  I told her to wait for this past Monday and if she still did not have them, I would mail another copy by Express Mail.  She received them on Monday.  She also went crazy as her taxes were more than she anticipated.  (We don’t have a lot of money - she has none.)  I ended up spending 2 hours on Tuesday writing up a breakdown comparing her 2016 and 2017 taxes for her so she would understand.  Time I really needed.

Husband is (again) planning a day trip.  This one on Friday, so I was trying to get everything done by then, but it won’t be.  We went to the bank today to transfer money to pay our RV insurance and I transferred extra money to pay what I figured we would have to send as a first estimated payment for 2018 as we don’t earn wages/have withholding and have to pay our taxes on our own. 

Then I started our return.  I should explain that we don’t generally pay income taxes due to our low income and high deductions.  We do have to pay Social Security taxes if either or both of us made $400 or more from businesses - and we pay double what people pay on their salary as we are the employer and the employee.  We also have ACA (Obamacare) medical insurance so we have to adjust our advance credit on our return - we always seem to have received a small bit more than we are entitled to.  No problem - we paid estimated taxes based on our Social Security taxes and the advance credit we owed in the past.

I should also explain that husband is always in a panic when we have to spend/pay money that we did not anticipate - because we don’t have a lot of it. 

So last night I started working on taxes - I summarized information - and today I started doing the return. 

First problem - I used our computer bookkeeping software to figure out husband’s business income and expenses after some adjustments.  I then went to enter it into the tax program.  Uh oh! Several expenses were missing - the entire categories of expenses.  I tried several times and in frustration complained to husband - working at his computer across from me on whatever.  He came over.  With the questions he asked, I figured out that somehow some of the expenses had become unchecked to be included on the statement and that is why they were not included.  I fixed that and printed out the corrected form and entered the information into the tax program.

I went on to get the same sort of statement printed out after making some adjustments - and this time checking that everything was checked to print.  I then managed to erase some forms from the tax program related to both of these forms and had to start all over - entering his business info and mine.

I then entered our other incomes - you know, the whopping interest now being paid on bank accounts, the small dividends from the small number of shares of stock he received as boy, etc.  Going well - no problems.

I then went through our items for deductions.  While the bookkeeping software has all the items paid by check or charge cards, I have to see if I paid anything by cash and then there are charitable donations of “stuff”.  As I went to enter our medical expenses - it all went blooey!

I had to enter the ACA medical insurance into the form that calculates if one is entitled to more credit or owes part of the credit back.  This form brought me to a complete stop and I went into panic.  It seems that when one spouse goes on Medicare and the other stays on ACA - it throws it all off.  We owe back 2/3 of the advanced credit we received.  I kept looking for what I did wrong.  I was shaking.  I finally decided that I had to tell husband - we don’t have enough money in the bank to pay it.  Luckily rather than panicking he started to see what he could find out online - he was actually comforting me rather than the other way around when we have an unexpected expense.  Nope, he found no way around it.  So tomorrow we will go and take money out of his IRA to pay it, as what we had and I transferred is not enough.  After Monday when I can breathe again, I will call and stop this year’s advance credit so I don’t have the same problem again next year.   

It is important to know that other this oddity, I think ACA insurance has been great, as even without the credit it is considerably less than we were paying before it - and it has been several years since, so we would be paying even more.  It was just a bit of a shock.

So all of our papers which were neatly sorted are now strewn around my desk.  I put it all aside until tomorrow - well, I will probably do some calculations tonight after I finish this post - we donated stuff and I have to add up what it was worth.

I know that somehow the return and the two extensions for clients will be done and out on time.  I will make sure it is.  Then Monday afternoon and night I can relax and rest - oh, wait, I can’t.  We have a reenacting unit meeting that night and I have to write my Treasurer’s report and go to the meeting.  Oh, and today the electric co came and trimmed the trees - they even actually trimmed the ones around the wires that run through the back yard that never get trimmed.  We do have tree limb from a neighbor’s tree which overhangs our garage and the line from the wires in the back yard to our house - they could not touch that, but there is a unit that does so and I have to call and have them come - since this tree branch is one of the things that scares husband during storms (not only would be without electricity, he is positive the wire coming down would set the garage - which is really his wood workshop - on fire), so that is something else to do on Monday.

I also have a folder next to my desk.  It contains all the things I have not done - or I only did what absolutely needed to be done and the followup was put in the folder - over the past 2 weeks - bills to check, items to scan or copy or send out, etc.  I still have to deal with that early next
 week. 

Oh, and I as do all of this - every time I need something from the office storage closet - business checkbook, more manila envelopes... I have to move the two stacks of stuff I set aside in January to donate in February - which will still be there until early May - and mentally scream about them.

THOUGHT OF THE WEEK -

No matter how well one plans, something goes wrong.  One has to roll with it and do what one can.  The extra money is upsetting, but it won’t affect our day to day lives (luckily).  The errors in the bookkeeping program printouts were found as I match this year’s taxes as they are done to last year’s so that nothing is forgotten. 

Oh, and my friend who is getting an extension, had a marvelous trip to Europe as a gift from a friend as it was cheaper to bring her along than pay the single surcharge.  That is a great friend she has!

INCOME TAXES ARE HERE AGAIN

Well it is February and time to think about (at least here in the US) income taxes.  With the exception of a few rare documents, most of the forms about your income were required to be mailed to you by January 31 and you should have received them. 

Again, while I am an accountant and tax preparer of over 40 years, nothing should be taken as specific income tax advice and you should consult someone who can help you with your personal situation.  The information I am giving is general information to help you organize what you need for your income taxes - this varies greatly depending on one’s individual circumstances.

The most common forms that people receive about their income are the forms W2 for wages and withholding from their employer, a variety of different forms with the number 1099 (dividends, interest, capital gains, pension, IRA, and other types of income), and if one has an interest in a partnership, a “subchapter S corporation”, a trust, an estate, or an LLC form K1.  (The latter are due out by March 15 as these organizations need a bit more time to prepare the forms as their tax returns have to be done first.)  You know these forms have been coming in - have you collected them in one place - a folder, an envelope or some other type of holder?  If not - go and find them  - now.  They are of the utmost importance in preparing your tax returns.  These are income amounts paid to you (and/or your spouse and possibly children) and you want to check them to see if they are correct (generally they are) and have them together as these amounts have been sent to the Federal government and possibly also your state to be matched up with your tax return when you file.  It is better not to miss any - but if you do, you will hear about it and receive a correction to your return.

If you have medical insurance through the ACA Healthcare Marketplace(aka Obamacare) you will receive a form 1095 which is needed to calculate if you received the correct amount of advanced credit to offset your medical insurance costs - or if you owe money on same or are entitled to a larger credit. 

Now that is the easy part.  The items you can deduct vary depending on who you are, what you do, the kind of job you have, where and how you live, etc.  A summary of what you might need or have follows -

    Medical expenses - records of amounts paid to doctors, dentists, pharmacies, eye glasses, medical insurance and other deductible medical expenses.  Since I post my checks into a checkbook software program, I can get a printout of all the items in question.  Don’t forget to include items paid by check or credit card or cash - cash being the one that is hardest to keep your receipts for.  Did you know that if you can deduct your medical expenses you can deduct transportation for medical related trips?  If you use your car there is per mile amount allowed plus any tolls or parking costs.  If you take a taxi cab or similar or take a train a receipt from same will help you deduct these costs if your situation allows you to itemize your medical expenses. These will be needed if you itemize your deductions.

    Income taxes - if all of your income taxes are withheld from your wages or other income this is easier, but many of us also pay estimated taxes during the year.  While the amounts withheld will be shown on your W2 (and possibly on some 1099 forms) you have to keep track yourself of any amounts which you paid for estimated taxes - to IRS and your state (and possibly other states if you work in a state other than the one you work in).  In addition to needing this information if you itemize your deductions you will need it as well as to be able to properly take credit for the taxes you have paid in against your final calculated tax for the year so that you pay the correct amount due or get the correct overpayment amount.

    If you own your home and pay real estate taxes - make sure you have that amount (the changes from the tax law effect your 2018 tax, not the current tax which is your 2017 tax, so the limitations in the new law do not apply for this filing.  It is deductible if you itemize your tax deductions.  Also, if you have a mortgage on your home you should have received a form 1098 which will tell you how much interest you paid on the mortgage for the year so you can deduct it if you itemize your deductions.

Sales taxes based on a chart amount based on where you live and your income plus large purchases (such as a car) are deductible instead of your state and local income taxes if the sales tax amount is larger - remember this is an either or situation (either state and local incomes OR sales taxes). 

There are other taxes which may be deductible depending on your state and other matters.

If you make contributions you should have received receipts for your contributions.  If you contributed a monetary amount it will show how much the organization shows you contributed.  (Sometimes these are end of the year statements from the organization.)  If you contributed “stuff” - you know you have all the items you are clearing out of your home as you organize and you gave it to Goodwill, Salvation Army, St Vincent de Paul Society, or the rummage sale at your church - you should have a receipt - but they are not allow to tell you what the items are worth.  You can go to the Salvation Army’s website and find a listing of what the range of values for these items are or check the items on E-bay to see what the item is selling for. 

If you have expenses related to your job - union dues, required uniforms, transportation if you travel between multiple locations other than your “commute” (first and last trip of the day), required education (but not to meet the minimum requirements of the job or to qualify for another job) and such they may be deductible this year (as of now they are not deducible next year) and can be deducted on your return as Miscellaneous deductions (there at the bottom of Schedule A).  Expenses related to your income is also deductible here - your bank vault if you keep income, information you paid for to help you make investment decisions, your income tax preparation cost, and some other items.

A problem with two of the above type of deductions.  With the exception of medical and “miscellaneous deductions” you can deduct what you paid.  However, you can only deduct your medical expenses over a percentage of your income and the same - but a smaller percentage - with the miscellaneous deductions.

If you are paid for employee related expenses - your boss reimburses you or gives you a per diem when you travel for example - make sure to check with your tax preparer about deducting the expenses you paid.  This can be done on a different form than above, up to the amount you received in reimbursement.

If you are self-employed and file Schedule C with your return, of course you also need whatever expenses you paid out for your business during the year.

Remember this year’s taxes are basically the same as last year’s.  It is the returns that you will in 2019 which will reflect the changes made to the income tax law for this year - 2018.  Be aware that the amounts being withheld from wages based on the new tax law may or may not be correct for you as everyone is different.  I don’t have all the information to correctly prepare estimated taxes for clients who need to file them.  In the past I would presume all would be the same - this year I cannot. 

While the standard deduction is being raised, and along with that more people will probably be using it due to limitations on deductions - remember the standard deduction is not really being “doubled” but going up from $12,700 to $24,000 (difference of $11,300) for married couples and from $6350 to $12,000 (difference of $5650) for single people. 

At the same time, as I understand it, another deduction called the “Personal Exemption” is being eliminated.  For 2017 this amount was $4050 each for you - if you are filing jointly - your spouse, and for each of your dependent children.  In addition if you - and your spouse if you are filing jointly - are entitled to an additional Personal exemption if you are legally blind or over age 65.

So, in 2017 a single person is entitled to $6350 plus $4050 (if they have no children and are not blind or over 65) which is a total of $10,400 - which is only $1600 less than the new standard deduction. If one is single and has a child and/or is legally blind or over 65 the new standard deduction for 2018 will be less than they could deduct for the combined 2017 standard deduction combined with the personal exemptions.

In 2017 a married couple is entitled to $12,700 plus a personal exemption each (again, if they have no children and neither is legally blind or over 65) of $4050 which comes to $20,800.  This is only $3200 less than they will receive next year.  Again, if there are any children or either of the spouses is legally blind or they have children - they will be deducting less in 2018 than they would be able to deduct for the combined 2017 standard deduction combined with the personal exemptions.

THOUGHT FOR THE WEEK -

Income taxes need planning before you go to your tax preparer.  Make sure you have all of your income items as well as any items that you may be able to use for an itemized deduction - in case they come to more than your standard deduction, and if you are self-employed for your business related expenses.

Now is also the time to think about next year.  Get a file or a large envelope - label it  - and start putting in items that are related to your income taxes next year - better to throw a receipt in that is not deductible than to be missing one next year.

Again, this is general information and not tax preparation information related to you.  Check with your tax preparer about your specific information needed.

BOUNCING CHECKS?

I am an accountant - since I was 12.  A few years ago I found the columnar book I used when I was in college to keep track of the cash I spent while in college. (Never a boring thing - I found out which was the first Broadway show husband and I saw together as we each paid for ourselves - something which greatly upset my mom - and I had my ticket purchase recorded in the book, what a nice memory from such a dreary thing). And yes, I used to always have cash I spent which did not make it into the book - adjustments the end of every week.  I keep our records on Quickbooks so everything is accounted for and my arithmetic is doublechecked by the computer.  We pay every bill in full - every month.  No part payments on credit cards.  I am sooo careful!

This has been a busy tax season for me - not exactly so much from the actual tax return preparation but on a personal level lots of things have gone wrong and we were busy trying to do things.  I spent last weekend through Monday night finishing up our personal return and our business return.  We mailed out our personal return Monday at the post office and picked up the mail in our post office box and then returned home so I could finish the business return. 

In the mail at the box was a letter from our bank to my husband.  I almost set it aside as I figured it was something about his IRA account.  I am so glad that I did not.  I opened the envelope and glanced in just to check what it was ----- A BOUNCED CHECK NOTICE???  How could that be?  Impossible!

We normally deposit money we receive in our savings account and then once a week I transfer money to our checking account to cover the upcoming bills plus a cushion for anything which might arise during the week.

However, we had needed a lot of money in our checking account all at once and it had to come from husband’s IRA.  We had a huge credit card bill due to my new eyeglasses, husband’s teeth, and regular expenses, plus our real estate tax was due and so on.  That money had to go directly into our checking account and it did - or so I thought.

As I started pulling out papers in the office to see what could have happened - Did we forget to make the deposit?  Did the bank make a mistake?  I felt like I was going to have a heart attack.  In addition to this check certainly more checks must have also bounced - with a fee of $34 per check this could cost us real money - plus it was the large credit card payment - there would be interest and fees there also as well as on the other end of whatever else had bounced.  My head was swimming.  I kept hoping it was a bank error as then there would be no bank fees from then and apology letters to where the checks had bounced and reimbursement for the costs resulting from same (or so I hoped).  I found the deposit slip and found it is was my error - out of force of habit I had deposited the check to our savings account!!!

I sat down to call the bank - I could barely see the phone pad to dial and could not see the deposit.  Husband offered “Do you want to go to the bank to deal with this?”  I looked at the clock - only 3:30 - we went to the bank.

One of the higher level tellers who knows me said hello and came over and asked how they could help.  I managed to get out that I had deposited the money in the wrong account.  He nicely told me that all I would need to do is transfer the money from one account to the other.  I sort of sputtered out that no, I needed to see one of the platform (desk) people as checks were bouncing. 

Luckily the person we spoke with was a woman I had worked with before for other more normal matters.  She also tried to calm me down.  She pulled up our account - two other checks had come through before a later transfer I had made into the checking - and they had both been paid despite the lack of money in the account as they were small amounts - but of course they each had a $34 charge.  Finding this out I felt a bit better - I had envisioned maybe 10 checks bouncing and the work that would be needed to be done, as well as the expense, as well as needing to transfer money to cover the cost of the fees on the checks.

She transferred the money to our checking account for us.  She then checked and since we have not had any other bounced checks or such in the last 2 years (on her records - maybe 35 years for us and then the checks bounced because my pay check bounced) she could reverse up to 3 fees for us - just the number of fees we had. Oh, I was feeling a bit better.  We thanked her and headed home. 

I then telephoned the credit card company.  I explained to the employee what had happened.  I think she could hear the panic in my voice as she was very reassuring.  She, of course, saw on our record what had happened and asked if I wanted her to debit our checking account to pay the bill.  I thanked her and said that I was going to ask if she could do that.  It was done and the payment was made.  I was very lucky.  I mail the payments at least a week before payment is due.  This payment was due on the day this was happening.  I checked with her and this counted as paid in full, on time - no interest due!  I asked her what the bounced check fee was - $25.  I was about to ask if she could waive it, when she said that she was going to check to see if she could.  Again, since we pay in full every month with no prior problems or fees, she was able to waive the fee.  I thanked her.  (I was going to fill in the survey that was suppose to follow and compliment her profusely, but it never came on the line and I hung up.)

I started to breathe normally again.     

Then I remembered that we had also received a letter from our RV insurance company asking again for the premium payment - per the transaction listing from the bank this was one of the checks paid without funds.  Panic started again.  Was this just a question of the second bill and our payment crossing in the mail or had it actually bounced.  I telephoned the insurance company and it was just a case of paperwork crossing in the mail - thank goodness.  The ability to breathe returned to me again.

I looked husband in the eye over the desks and told him that he could yell at me all he wanted to about this - “tomorrow” - I could not deal with it that day as we still had the business return to finish and send out the next day.  He is not a yeller, but sometimes out of frustration yells, and I could see this being one of those times.  He calmly said that he was not going to yell, but thinks it would be a good idea for him to check things as we go along and that I should do the same for him as he is forgetting things and getting confused.  I told him this was fine with me as I keep trying to get him more involved in our money management (we are the opposite of the normal “husband deals with the money and the wife has no idea about it”) and it would be fine with me. 

The corporation return went out on Tuesday on time.  Finished - except for all the catching up.

Important to note is the fact that I was able to get all the fees waives as it was a one time occurrence.  My hard work at keeping all our bills paid timely and in full paid off again in this situation.  It was obvious that it was some sort of one time unusual problem and not us bouncing checks at random. 

The fact that it was dealt with immediately also helped as there was no time for additional charges to occur - if I had called the credit card company the next day, my payment would be late and I would either be asking for the interest payment to also be waived or paying the interest - on our largest credit card bill in years.     

THOUGHT FOR THE WEEK -

It should be obvious after the above that my thought is that it is very important to make payments on time and in full - or at least the entire amount of the minimum amount due or more.  When one has a good record with the various companies one does business with (and yes, your personal finances are doing business with the various companies you deal with) it is recognized when help is needed. 

In addition, hopefully you have all filed your income tax returns if you are in the U.S. or at the very least have filed an extension.  Start working to make next year’s return easier to do.  At the very least set up a folder or large envelope and drop bills  which will be deductible next year into it.  Drop income items into it also.  Put a large X or * next to expenses paid by check or credit card payments which pay same if they are tax deductible.  A program such as Quickbooks or Quicken or a simpler program can be a big help if you use it.  A spread sheet that you make up in Excel or similar can also help.  I personally do not keep anything in “the cloud” and want my data here in the house, but if that is what you prefer that can help you also.  (“The cloud” is actually just someone else’s hard drive and since it on the Internet it can be, and most of them have been, hacked.)
               

HOLIDAYS AND TAXES - UNRELATED SUBJECTS

Hello again. 

We did not go away for my husband’s birthday due to, yes, rain again.  There is no point in going to outdoor market when a good chunk of the outdoor vendors will not be, especially if one is going to travel 3+ hours each way and pay over $20 in tolls to go there.         

I have been busy finishing up client’s tax returns and have only one left to do and I am waiting for the information to do it.  So I started on our personal and business returns.  Money goes back and forth between us and the business - something is on our credit card for the business or vice versa, so the first thing I have to do is make sure what the business owes us is the same amount on the business’s books and on our books.  Sometimes I post something on one set of books and forget to post it on the other. That took 2 days to work out - and the end of 2015 I got it to match, so the differences were all last year - finally both the business and our books agree. 

Next week is holiday time - Monday night is the start of Passover and next Friday is Good Friday, followed, of course, by Easter Sunday.  If you are having people in for the holidays - do you have your house ready?  Now is the time to start.  Try to do better than throwing everything in that extra room with door that stays closed when people are over.  - You thought I didn’t know about that?  I started doing this when I was a kid - cleaning my room meant throwing everything in the bottom of the closet - this would result in my finding the leftover Halloween candy sometime the following August - luckily I never had bugs or other little visitors as a result of that.  Try to actually toss out some items - or take them for donation.  (I took 5 suitcases today for donation - one hard side rolling bag and the rest were soft bags that I managed to fit into the rolling bag. - a little more room in a closet for other stuff.)  Plan out your menu if you doing the cooking or assign who will bring which dish if you have an arrangement where everyone brings part of the dinner.  I keep my recipes for the holidays on the computer.  They used to be in a cooking program (technically they still are, but it needs a parallel printer to print them out and that means running cables...) I printed them out and scanned them (remember I posted last October about how great and important it is to have a scanner and a printer - this is one example) into the computer.  Now I can print them out when needed.  I print the recipes I will use and throw them out as they are finished with - easy to see what still needs to be done. Even if you not are not going to be responsible for the hosting or cooking - make sure that everyone’s clothes will be ready for them to wear for the holidays. 


THOUGHT FOR THE WEEK -

Income taxes (here in the U.S.) are due April 18, a week from this coming Tuesday.  There is still time to get them finished.  If you find that you will not have them done - whether because you are too busy to do them, can’t find info, or did not get info from someone needed to prepare them, you can file for an extension of time to FILE.  It is not an extension of time to pay - so make sure you have paid in enough for your taxes - from withholding or by filing estimated taxes - to be at least as close as possible.  If your income is the same as last year as far as you know -then make sure you have paid in at least the same in taxes as your taxes were last year - 110% of last year’s if you have a high income. 

There is a form from IRS to file to get the extension - it is automatic and you will have until October 15, 2017 to file.  Depending on your state you might also have to file a form for an automatic extension or it might just be automatic. Again, this is an extension of time to FILE the return, not to pay the taxes. 

If you do get an extension try to prepare and file your returns as soon as possible so if you do owe  additional taxes you will pay as little in possible in any penalties and interest for paying late - and if you are getting a refund, don’t you want the money as soon as possible?

If you have not filed your taxes in the past - get them filed also.  The April 18 date may be important for you too.  If a return is filed more than 3 years late you will lose any refund due you and if you owe money on the returns you are adding penalties and interest to what you owe - every month and if you have not filed a return - then IRS (and the state’s) 3 years to go after you for taxes owed does not start to run and they can come after you until you file a return (then they have 3 years) or forever. 

If you get a large refund you might want to change the amount withheld for taxes or pay less in estimates - a refund may be exciting, but IRS and your state is using your money.  If you can pay less in advance without underpaying the taxes that is money in your pocket (or even better your bank account) during the year on which you can make (the current tiny rate of) interest or you can pay down a bill and pay less interest.                                                     
If you owe money - file your returns even if you cannot pay the amount due.  Pay as much as you can and attach a letter explaining.  Depending on how much you owe, a payment plan from IRS (state) maybe easier than you think to get - but you are paying interest (and will pay penalties for underpaying your taxes) until the amount due is paid off.

Another reason for paying your taxes is that there is a scam in which someone calls you and rather threateningly tells you that they are from the IRS (state) and you owe taxes - which won’t worry you if you know you don’t owe any taxes.  In case you haven’t heard this - IRS (state) will not call you for payment of taxes without having mailed something to you first.  Don’t fall for this scam.  (Or similar ones claiming that if you do not pay immediately with a gift card your utilities will be shut off.)  One thing to remember is that IRS, states, utilities will never tell you to buy gift cards to pay off an amount owed - especially not Apple gift cards. They will not want you to wire money to them.  (There are postal laws that can be used against fraudsters, so they want they want the money otherwise sent to them - by wire, UPS, FedEx, etc.- to avoid the postal laws.) They will want payments by check.  (They may also take credit cards and charge you a fee for using same.)  Also if anyone ever calls claiming to be from the government or a utility and threatens you for payment.  If you are unsure, ask if you can call them back - a refusal to allow you to do so is another indication that they are not legitimate.  Call the government agency or the utility directly and ask them if this was a legitimate call.  If you have a tax preparer - you should be able to call them for help.  But again - if one is not delinquent, then one knows that one does not owe the money. Personally I do not talk to anyone who calls.  We have our answering machine on all the time and we screen our calls (originally as we did not want to have to tell all the people who thought we were a pizza place, a doctor, or an eyeglass store that they were wrong, but now it is so we don’t talk to any of these con men).  IRS has a link on the first page of their site to information about current scams.

I do have to give you a bit of disclaimer.  I am not a CPA, just a garden variety of accountant and tax preparer.  The information I have given (other than the fraud warnings) may or may not apply to you.  It is always a good idea to use a legitimate tax preparer (IRS has a directory of tax preparers who meet certain education standards and have a good history of no problems with returns on their website). You can also find free help depending on your return and circumstances through various programs - check at your local library for these programs.   IRS’s website is irs.gov   

And don’t forget - it is never too early to start preparing for next year’s returns.
   

WORKING IN THE DARK

We were suppose to go to Pennsylvania for the day on Tuesday, but when we woke up - it was raining.  No point in going to a mostly outside farmer’s market - driving 3+ hours each way and paying over $20 in tolls, just for half the vendors not to be there because of rain, so we did not go.  I had planned on going to a client Tuesday and put it off due to the planned trip. 

So husband changed the plan to go on Friday.  I sat down yesterday (Tuesday) and instead of doing things I should, I paid our bills and figured out how much we have transfer to our checking account to cover the bills - and making sure we had enough to do so. We went to the bank today and dealt with it all as I will be in NYC tomorrow and husband does not like to deal with our finances - he is always afraid he will do something wrong and checks will start bouncing. Normally we go to the bank on Fridays, but we hope to be away.

 I needed to catch up on work that I am behind on for the two clubs of which I am treasurer as well as work on client’s income taxes.  I planned to finish doing so today when we came home from running errands.  I turned on my computer to check email.  I was just finishing a rather long, complicated email and BANG!!  The lights went off with the sound of an explosion.  We know what this means - the transformer blew again. I called the electric company and was told that they know that 32 customers are out and the crew is on the way.

I unplugged my computer and related items - don’t want the electricity to come back on and spike and damage something.  Now, what to do?

I pulled up the shade and pulled back the curtains.  I sorted through some blank paper (sorted it by size) that I keep on the top of the folder holding shelves on my desk - I needed to do this for a while.  Then I went through the papers from one of the clubs mentioned above.  I had to do followup work on the annual renewals - pulled out the blank membership forms and put them in my “take to the meeting folder”, pulled out assorted papers from last year in the same file and put them together to file away.  Still no electricity.

I went to the you know and on the way I noticed that there was a lot of light coming through the window into “the teddies room”.  Hmmmm.  I wanted to go through the suitcases on the bottom of the closet in there and donate most of them as we no longer use them.  I moved the teddies and Cabbage Patch Kids still sitting in line to see Santa.  So I could open the closet door.  I found out that there was more in the bottom of the closet than I thought - an entire carton I did not get to after we had the bed bugs - I was wondering the other day what happened to my teddy bear magnets.  Carton was put aside to go through another time.  Tubes with posters in them were set aside for husband to look at - they must be his. 

I took out the assorted suitcases.  My idea is to come down to the larger suitcase on wheels (which husband likes to use), my shoulder carry suitcase, a backpack on wheels, and some of the smaller completely soft bags and 2 hangup bags.  (The latter as they are hard to find.)  When we travel now we travel in our RV and we bring the clothes into it in laundry bags, store the clothes in the closet, and then use a bag for the dirty laundry and the second one to carry the leftover clean clothes back into the house.  We want the suitcases for emergencies or other oddities.  We also have some small bags that we use when we go to quilt, woodworking shows, etc. to carry lunch and/or purchases, as well as some small bags we have received as donation gifts that are really nice, good bags and we use at various times.  I had planned on putting all of the other bags in the rolling bag.  Not big enough.  I put all of the other luggage in it.  I put all of the small bags into the rolling backpack.  Okay, down to 2 bags.  Better than it was. 

The idea of this cleaning was to not only get rid of unneeded luggage (and get a tax deduction on it next year), but also to make room in the bottom of the closet for plastic boxes.  Husband has a collection of articles about James Bond which are stacked and taking up room on book shelves.  We will store the articles in plastic boxes - they will stop get dusty - and have more room for books.  The boxes we bought to use for this fit perfectly where I planned to use them.  The plastic tubes with posters will probably have to go back in the closet - they should fit behind the 2 suitcases.  I will have to go through the carton and see what it is in it and what to do with it. 

Oh, I also found 3 teddy bear ceramic craft items to paint.   I knew there were more of them, but did not remember what or where.  I still like 2 of them and will keep them and paint them.  I need to think about the third one and decide if I like it - if not it will also be donated.

At some point as I was finishing up I realized that the lights were on downstairs and we had our electricity back.  Only an hour and a half.

I finished the catchup work I needed to do.  I plugged in my good laptop to charge and pulled out everything I need to go to work tomorrow. We picked up Chinese takeout for dinner.

On Wednesday nights I do laundry and write my blog post.  I had planned to take a shower tonight, but fate again ensued.  In the middle of writing this post - no really, between the second and third paragraphs to be exact.  My husband came downstairs as he did not feel well.  Nothing major, but he could not find the over the counter medication he needed.  I looked.  Unfortunately what happens is we buy OTC medications and then by the time we need them again - in some cases by the time we need them at all - it has expired.  I don’t mean - “darn it was up last month”, I mean it expired years ago.  I tend to toss them if I see them.  Some items I will replace right away.  Ones we rarely use I don’t.  This apparently tossed when it expired and was not replaced.  Husband was in a panic.  Our Walmarts here are not 24 hour stores, except for the Neighborhood Market one (basically a supermarket only).  So I left the washer running, shut down my laptop and off we went to the Neighborhood Market - 10minutes away.  Of course nothing matched what he bought last time and it took awhile to figure out what to get.  And as long as we were there and out of sugar free vanilla pudding, I ran and grabbed 2 boxes to have them.  Then home again to finish this post.

Decision time - write post or take shower?  Well, you are reading this aren’t you?  I will wash myself well before going to bed.  My client’s loss in my freshness is your gain in having this post to read.

THOUGHT OF THE WEEK -

Go with the flow.  When all seems to be going wrong, take a deep breath and think, just go with what needs to be done.  Anything which can wait - can wait.  I could have panicked today, but did not.  When I could not do what I planned to do - use the computer - I found something which has been waiting to be done for months and I could do. So now something which has been sitting is accomplished and most of what I was going to do is also done.  I could have told husband I couldn’t go with him to get the medicine, but I knew it was important and that he would have a problem if he went alone (and I would be worrying about him) so that was done and I will deal with no shower.

One can go crazy when one is sidetracked or deal with it and see what can be done as a result of the sidetracking or what can be eliminated or delayed to deal with it.                

DID NOT FALL BEHIND THIS WEEK - CAUGHT UP A BIT INSTEAD

Well, here it is another week gone by.  Time to write again. 

First a bit of how I am writing and posting this blog.  The first few posts I wrote in advance as this is at least my third attempt at a blog (on varying subjects) and I figured if I kept 3 weeks ahead I would be fine.  Of course like, I am guessing, most of you, I used up the 3 posts and now post week to week.  I have a reminder on my calendar for Tuesday night to write the week’s post so I can post it on Wednesday night (which is generally around midnight Wednesday into very early Thursday morning) which give me a chance Wednesday night to proof read it again or write the post if I did not get to it Tuesday night - which happens much too often.  So, if you are coming to see read it, it is posted by early Thursday am Eastern US time.  If you sign up to receive it weekly in your email it seems to arrive late Thursday.

It was another week of getting very little done as I get sidetracked from doing things by husband and by “emergencies” which arise.  But I did get some tasks done. Repeat tasks such as bill paying, laundry, dish washing and such get done ahead of lesser tasks.  They are necessary to keep the house and us going. 

I had left the bed made up in the RV for our next trip, but the generator needs to be worked on by a mechanic and he needs access to the air conditioning switch inside the RV - over the bed, so I had to unmake the bed yesterday - about an hour of wasted time to do so, get the bed itself disassembled and covered with plastic covers to keep it clean.  When we go away next, there will about another hour putting it all back together and making it back up - I had hoped to avoid this work as we had only traveled on our last trip for a few days and our next 2 trips are of even shorter duration.  As long as I took it apart I will wash the bed linens.  For each of us there is a large laundry bag which holds a blanket, pillows, and mattress cover from half the bed (since it is made up as if it was two adjacent twins) - marked so I know whose is whose - since someone other than us will be inside the RV, the laundry bags are sealed in plastic bags.         

The bank statements for us and for the two non-profit organizations of which I am treasurer this past week and all the statements have been reconciled and filed away.  I actually got the stack of items on my desk waiting to be done back down to what I needed to do about 6 months ago. I am sure it will grow again.

I started working on a corporate income tax return due out by September 15 - maybe it will be out early for once and not at the last minute.

We have started calling up and changing our mailing address for our various financial mail (bills, statements, and checks to deposit coming in - nothing fancy) to our Post Office box as a way of dealing with our mail going astray.  I am calling and changing each as I go to pay the bill or deposit the check. I figure when we go to the banks we will change the mailing address there.  Husband has taken care of a couple of items which are his.   We may have a problem in winter or bad weather as we will need to get to our PO box, but we can always call and find out how much to pay and where to send it.  We pay our bills the old fashioned way - by check and mail.  This has helped us, in at least one case, avoid having our info stolen from a company which was hacked.     
       
I have not finished putting away the food from last week’s trip - I have it in plastic boxes which snap closed and it is mostly the same snack food we eat at home, so I have been using it up bit by bit instead. 

I did 4 loads of laundry last week to catch up on our clothes and towels as I had done it early the week before to go away with all clothes cleaned.  I did not change the bedding as since we had been away, we used the bed over 2 weeks the equivalent of sleeping it in for just over one week - a big time saver - and, as I told you, I hate sheets.

I went through my food books last night - cooking and diet - and sorted out 27 of them to donate.  Mostly these are in reference to diet related to a condition we both have and are no longer needed by us as we know what to do.  Other books were ones which seemed like good ideas or were gifts or for foods we no longer eat.  Don’t worry - there are still lots of cookbooks on the shelf - but I did manage to get it down to one shelf so there is lots of room in the bookcase for crafts books.  The cooking books are on the bottom shelf as they are not used often.  Some of them I know I will never use, but they are sentimental favorites and one is a “Gone with the Wind” cookbook, of no real use, but I could not part with it.  I kept the cookbooks for an assortment of types of cooking we like and a couple that we have never used, but still sounded interesting.  I put the ones we are keeping back on the shelf in sections based on what they are for - with a stack of assorted types of paperbacks facing forward to save room and make them easy to see.

So it was more or less a typical week around here.  A bit of decluttering, a bit of organizing and much wasted time. 

       
   

TAXES PART 3 MORE DEDUCTIONS - THE FINAL PART

Wow, I thought I might not get a chance to write and post this week.  I am in the final leg of doing tax returns for clients (ours waits until the clients returns are finished), preparing for a club meeting today, my husband’s birthday this past Monday and a day trip out of state for his birthday yesterday, Tuesday, I have not had a chance to write the post, something I usually do overnight Tuesday to Wednesday.  So here it goes -

The last two posts were about income and the most common types of deductions for personal income taxes and saving the paperwork during the year (and sort of what you should be looking for now if you did not save the paperwork during the year) so that the returns can be easily prepared and filed.  Today I am going to talk about some common,but less common deductions which go on the same form - Schedule A.  You also know that I will now tell you that you should not rely on this post for income tax advice and you should always check with your tax preparer and that different things apply to different people and different situations.

There are an assortment of situations in which one suffers a financial loss. called a casualty loss.  Sometimes one can deduct part of the loss on their taxes if they file Schedule A.  If you had a theft loss, a accident, such as car accident, vandalism, fire, or storm damage or a bank in which you have money becoming insolvent - these are some of the losses which can be deducted.  You need to fill in another form 4684 and attach it to your return, which will give you the information to fill in Schedule A.  So if you had any of these situations, keep any paperwork you have - insurance claims, police or fire reports, etc.  (Put them in what?  Yes, your envelope.)  There are limits on this deduction - you have to subtract $100 for each event and the loss has to be more than 10% as calculated in a certain manner and you have to subtract any insurance payment or other reimbursement from your loss.  When you do the paperwork for this type of loss you can take the loss in value of the item(s) as the deduction amount.  What does this mean?  If your car was hit by someone it is a casualty loss.  The loss is not what it cost you to fix the car - it is the difference in value before and after the accident.  If the car was worth $20,000 immediately before the accident and immediately after the accident it is worth $10,000 - your loss would be $10,000 - but then you have to subtract what you received from insurance (yours or someone else’s) and/or what the person who hit you (or anyone else) paid you towards the damage to the car.  Then you subtract $100 and then you will have to do the 10% of your income (calculated a certain way) calculation.  If you have an item stolen - then the value after the casualty is zero (unless it only partially stolen).  This is the sort of thing that makes it good to have someone help you with your taxes.  I thought I would mention it as not everyone knows about it.

Then there are what are called miscellaneous and certain job expenses.  If you have certain expenses related to your job (and you are not self- employed) they can be deducted - maybe.  Like medical expenses the expenses in the category have to be more than a certain percentage of your income 2%.

First, job expenses.  There are specific job expenses which are allowed  - union or other dues required for your job.  Uniforms or other special clothes you need to provide for your job.  This category can be odd.  One reason doctors traditionally wear white coats?  The white coats are deductible, a suit jacket is not.  Deducible clothing can not be clothing which can be worn for every day purposes. This would also include tools if you are required to provide your own tools for work. Commuting to work - your trip to your normal work place and home again - is not deductible, but if your boss sends you out from work and you pay the cost of getting to the other location - it is deductible.  There is a form 2106 (isn’t it great how there is a form for everything?) on which one lists their job related expenses - the instructions will let you know what can be deducted, as does the instructions for Schedule A.  Some job related education can be deducted - read the instructions.  If your boss reimburses you for expenses it is income to you and you want to deduct the expenses you paid out to decrease this income.  You can deduct the job expenses allowed against what your boss reimbursed you for same even if you cannot itemize your deductions using the form 2106.  If your expenses are more than the your boss gave you - that’s when it is deducted on your Schedule A.  Certain expenses are allowed based on your job.

You can also deduct in this section of Schedule A expenses related to making your investments - publications, a safe deposit box if you keep financial papers in it, if you pay your income tax by credit card and you are charged a fee by your credit card company, what you pay for your income tax preparation or consultation, and other items - again they are listed in the instructions for Schedule A.  Did you have to close a CD early and pay a fee for doing so?  Yes, it is deductible here.

There is also a listing of items you cannot deduct in the instructions for this section in the instructions.  Again - keep all the paperwork and put it into your envelope as you get it.

You may wonder why some deductions are allowed less a percentage.  This is an attempt to make the taxes fair (yes, I said fair).  Your medical expenses can be deducted, for example to the extent that they are more than 10% of your income?  Why?  Well in a simplified explanation, our friends at IRS realize two things - first, everyone has normal medical expenses and second, people with higher incomes can afford to pay more for their normal medical expenses than someone who makes less money.  At the present time the amount they consider to be what is normal for a family is up to the 10%.  But they also realize that older people often have more medical expenses and therefore once one is older, the percentage falls to 7.5% of income.  Oh - did I mention that medical expenses include dental expenses? 

Similarly the idea is that casualty losses of up to 10% can be absorbed by someone, while larger amounts cannot be as easily absorbed - and again those with higher incomes can deduct less - in terms of dollars - than someone with a lower income.

The same idea applies to the job and “miscellaneous” deductions - 2% is normal for these expenses to be, and over that is what is unusual and can be deducted. In this case there is also an understanding that someone who receives reimbursement for their job expenses might be better off not using Schedule A and itemizing (listing) their deductions, so on form 2106 they can offset their reimbursement and job expenses.

Even the idea of itemized deductions is IRS’s understanding that not everyone is the same.  Everyone is allowed a “standard deduction” which is what IRS thinks the average person should have in all of these items. (And there are different standard deduction amounts for single people, married couples, heads of household, and older people.)  If you have more you are allowed to list what you actually have in these expenses and deduct the actual expenses you have itemized (listed).  Once one’s income is over a certain amount than one is not allowed to deduct as much of their itemized deductions - again, those with higher incomes can better afford the expenses listed and are more limited as to what they can deduct.

See, you didn’t know that IRS could be nice to you, did you?

Taxes are much too hard to explain in simple terms so all of this is a generalized, basic idea to tell you what the average person should be aware to keep paperwork to help with their taxes.  An envelope - big manila, labeled and in a specific place is a great start to helping you keep it all together for your taxes.  Not mentioned here is an assortment of specific items - such as if you own a house - keep the papers from when you bought it and any major repairs or additions until you sell the house. 

The instruction books from IRS are actually a good source of help.  If you look at them online in pdf format you can search the instructions to find what you need.   

Talk to you next week - on a new topic, but don’t forget to start your envelope for this year if you have not done so yet - make your 2016 taxes easy to file in 2017!
                                   

GATHERING PAPERS FOR INCOME TAXES - PART 2

Last week I talked about collecting paperwork for your income for your income tax.  This week I am going to talk about collecting paperwork for the deductions (subtractions) from your income tax.  While most deductions can be only taken if you itemize (list on Schedule A) your deductions, some can be taken even if you do not.  I would also like to explain “deductions” and “credits”.  A deduction will decrease your taxable income.  A credit will directly decrease the amount of tax you owe.

Paperwork for deductions is harder to collect and organize than that for income because while most of the income papers come to you at the end of the year, the paperwork for deductions is ongoing through out the year.  Remember the envelope I suggested you set up?  Proof of your deductions should also go into the envelope - if you start the envelope for the year in January you can add in the papers as you go through the year.  Even if you were not able to itemize your expenses last year drop the related paperwork in the envelope - you never know.

Again, nothing in this blog is intended to be income tax advice and you should always consult your tax advisor/preparer for what deductions you can take and what documentation you need.

The first type of deduction is medical.  This includes medical insurance, doctors, dentists, laboratory fees, prescriptions (generally not over the counter medications), hospitals & other procedures, eyeglasses, hearing aids, dentures, braces (tooth and otherwise) etc.  You may have canceled checks, credit card slips, receipts for payments, statements from your medical insurance, etc.  Drop them into the envelope as you get them.  Get a color ink pen and whenever you pay anything which can be taken as a deduction on your taxes put a mark in your checkbook and/or next to the listing on your bank statement so you can easily find the amounts you spent which are tax deductible at the end of the year.  Keep track of your mileage for medical trips or keep receipts from public transportation as you can deduct the cost of the trips.  There is a mileage rate set every year by IRS, lower than that for business, specifically for medical trips, so if you know how many miles you traveled during the year for same, you can deduct for same.  Medical expenses for “you” includes those for your spouse and anyone from your household you who you claim as a dependant (list) on your tax return.

The next type of deduction is taxes.  If you pay state/local income taxes, real estate taxes, depending on your state - personal property taxes, car personal property taxes (different from car registration) and other similar taxes they are deductible.  If you buy a large item during the year (such as a car) you want a record of the sales tax you paid on it.  Again, copies of checks (or marked items on statements and/or in checkbook), paid bills, etc. should be kept. If your locality allows you to request a paid bill - get it (I know that all I have to do to get same is to check a box on the slip I send with the real estate tax payment).

Next is mortgage interest.  There are limits and requirements, but most interest on your home (and a second home) mortgage is deductible.  You should receive a form 1098 at the beginning  of the next year (around when you get your W2 and 1099s) showing the amount of interest you paid during the year.  It may also show the real estate taxes and/or home owners’ insurance your mortgage company/bank paid for you.  If you have more than one mortgage you should receive a 1098 from each of them (whether you have multiple mortgages on the same house or you sold your house during the year and had mortgages on the new and old house or there is one on each of several houses you own.) The insurance is not deductible, but the form can be used to show proof of the amount of real estate taxes you paid.  If you live in a coop you may receive one of these from your coop showing your share of what the coop paid, as well as a second one from your personal loan on your coop.  Guess what?  Drop the 1098(s) in your envelope. 

Charitable contributions?  The government wants us to be generous to what we call charities (they call them not for profit, tax exempt organizations).  This includes a large variety of organizations from large (such as the American Cancer Society) to medium size, local (your church or other house of worship) to small (a foundation set up for the family of a firefighter who died for example).  One thing that they all have in common is that they have registered with IRS and have been declared to be a not for profit, tax exempt organization.  IRS has a list online -  https://www.irs.gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check
If an organization is not on this list you can not deduct contributions to it.  This includes the dollar you give the homeless man or woman on the corner.  (It is generous of you to do so and I am not telling you not to, but you cannot deduct it.)  Again, you need proof of the amount you donated - our old friends the record of the check to them or a credit card record of money donated, etc.  These again go into the envelope.  Some organizations, such as churches or synagogues or mosques will send you at the end of the year what you have donated during the year - if you are donating cash to your church there is usually an envelope you can put it in with your name or other information so that at the end of the year they can send you a letter with how much you have donated during the year including the cash. (What you pay for items you purchase at the bazaar, rummage sale, etc. during the year are not deductible.)

You can donate other than cash.  If you donate items to an organization (you know the stuff you are getting rid of while decluttering and organizing your home) - Goodwill, Salvation Army, and St. Vincent dePaul being the more common ones I know - they should provide you with a receipt for your donations.  When I do this I make a list of what I am bringing and how many bags, etc. they are in.  They will then give a receipt saying, for example, 3 bags, and I will attach my list to the receipt and drop in the envelope (well in my case it is a file, but for you - your envelope).  The organizations are not allowed to provide a value to you for the items donated.  When you are doing your taxes or when you get a chance - there are websites, including one from the Salvation Army, which will provide you with a range of values for various common items - remember the value is not what you paid for it, but what the item would sell for in a thrift type store.     

In certain cases if an item one is donating is expensive there are special rules for deducting the donation, including the need for appraisal.  So, as I say, make sure you check with whoever prepares your taxes as to what information and documentation you need.

If you volunteer your time for a listed organization you can deduct your expenses in doing so.  You cannot deduct the cost of your time, but if you need to spend money in volunteering  the money spent may be deductible.  My husband and I are reenactors.  Our unit is an educational not for profit, tax exempt organization.  We have to provide our own period clothing - the cost of same is deductible.  If I am going to demonstrate something to the public and I need equipment or supplies to do so and I pay for them - the cost is deductible.  You can deduct the cost of traveling to and from where you volunteer - again there are IRS special set mileage rates for volunteering so keep records of when you volunteer and where so you can take the mileage and get and keep receipts if you use public transportation.

Well, this is running long.  I guess there will be a part 3 continuing with some of the other deductions you can take and should save records for.