M&N Tax Gets a New Home!

In early 2006, the office of M&N Tax Consultants underwent an extensive remodel. The building looks completely different and the builders did a wonderful job. For starters, the front of the building was extended closer to the road to add space, and the entrance is now at the side of the building where a handicapped ramp and stairs were inserted to make it easier to enter for our elderly clients. The outside was painted a lovely white with green trim and is offset by lush landscaping.

The interior spaces including the reception area and offices are much larger. We now have six office spaces, four of which are occupied by employees and two for filing and miscellaneous items. A modern kitchen has also been added as well as two bathrooms -- one with handicapped access that even includes a shower.

The end result is beautiful and we would love you to stop by anytime you’re in the area to have a look inside. See you all soon!

Tips for You

Withholding Tune-Up.  I helped several of you calculate a different amount of withholding. Did you watch the next check to see if the right amount was withheld? You may have marked the form correctly, but someone had to enter the data to a computer. Mistakes happen. If you’re not sure I can re-check the figures by seeing your pay stub. Call me if you’re unsure. It’s much simpler to check now than to face a big surprise when we prepare your next tax return.

Home Daycare Centers.  You can use an IRS allowance for meals and snacks served. You win two ways—easier than keeping grocery receipts, and you’ll get a bigger deduction! For 2006 you may claim $1.06 for a breakfast, $1.96 for lunch or supper, and $0.58 for each snack. Hawaii figures are $1.23, $2.29, and $0.68. Alaska is even higher-$1.86, $3.17, and $0.94.

IRS Notices Early.  As mentioned earlier, IRS computers compare your returns with records from employers, banks, and more. The notices for 2004 returns are already arriving. They used to start showing up in August or so, but IRS is moving more quickly. If you get one of these, please call me right away. Don’t call IRS first. We need to be sure IRS has not made an error before offering a response.

Did You Watch the Academy Awards? IRS did.  Oscar winners and nominees are given lots of free goodies at the event. IRS says these are taxable income, not tax-free gifts. IRS will check several stars to see if they claimed the income!

Contributing Autos to Charity.  Please remember, the charity must tell you how much they received for the auto. They use Form 1098-C for this report. Unlike other tax forms which come in January, these are issued within 30 days of the sale of the auto. If you get one of these forms, put it in a safe place. Without the form, the largest deduction you may claim is $500.

Summer Day Care.  There are tax credits for expenses to have your children under 13 supervised so that you can work. When school is out, parents turn to different activities. Any overnight experience does not qualify. Nor does any activity that provides education—the rule here looks at whether the activities are customary as part of normal school classes. Computer camps and dinosaur camps are examples. As long as it’s just fun and game, you’re OK.

What’s a Reverse Mortgage?  This question pops up more often each year. In short, this is a form of borrowing that acts like a pension—it produces a monthly income. Why would someone do this? I’ve seen older couples with a monthly income so low they have difficulty getting by. However, their home is fully paid and quite valuable. For such a couple, the reverse mortgage can be a smart solution. They don’t borrow a large sum up front. Instead they get monthly checks to allow them to live comfortably. The borrowing stops when they pass on, and the estate pays the debt when the home sells. Not for everyone, but an alternative for retired or disabled folks who own their homes.

Tax-Free Vacation Income.  Going on a vacation this summer? Did you know you could rent your home for up to 14 days while you’re gone, and the income is tax-free? True. Up to 14 days’ rent on your own home is totally tax-free. Fully legal, and might make your own vacation a little sweeter.

I know you just filed your return. However, tax planning really is a your-round job. I like to keep myself up-to-date on any changes in your financial life. I can’t do the returns right now. Neither can I make your decisions. Very often, however, I can help you avoid costly mistakes and save some money. Call me right away if you:

1. Changed your address
2. Changed jobs
3. Got a big raise or bonus
4. Exercised a stock option
5. Retired
6. Got married or divorced
7. Had a child
8. Adopted a child
9. Sent your child to college
10. Got your child a job
11. Opened an account for a child
12. Collected unemployment
13. Start receiving Social Security
14. Started collecting a pension
15. Cashed an IRA
16. Won a prize
17. Won big at the track or casino
18. Won the lottery
19. Served as a paid executor
20. Received a director’s fee
21. Won a lawsuit
22. Received alimony
23. Paid alimony
24. Sold stock or securities
25. Begin mutual find investing
26. Opened a retirement account
27. Sold your home
28. Bought a home
29. Helped the kids buy a home
30. Refinanced your home
31. Remodeled your home
32. Think of starting a business!
33. Started a living trust
34. Add someone to title on your home
35. Bought a rental
36. Remodeled a rental
37. Started renting out your home
38. Let a friend move into a rental
39. Sold a rental
40. Began using a car for business
41. Sold your business car
42. Became a telecommuter
43. Let spouse use the business car
44. Cashed in EE Bonds
45. Inherited money
46. Inherited an IRA or pension
47. Reached age 59
48. Reached age 70
49. Became disabled
50. Are confused

There are even more! But I think you’re getting the idea. It’s simple. Tax laws can have an impact in every area I’ve listed, and more. At the least I want to make you aware of what’s happening, and whether there is a tax impact. Even better, I might be able to help you save some money. Let me help.

Copyright 2006
Tax News & Tips, San Diego, CA
www.taxnewsandtips.com