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Top IRS Triggers for Small Businesses

By Tax Law

An IRS audit: few things strike as much terror in the hearts of small business owners than this simple phrase. You try to do your taxes accurately and on time, or maybe you have an accountant to prepare your taxes on your behalf. Though mistakes can happen, there are a few areas that are the more likely than others to trigger a visit from the IRS auditing staff. Below are five such triggers you’ll want to avoid if at all possible when preparing your taxes.

1. Simple errors. Simple errors, like writing your Social Security number on your return incorrectly can bring your return to the attention of the IRS auditors. Likewise, mathematical errors on your return, especially in totaling your income, can bring on an audit.

2. High income. Do you report more than $1 million in earnings? Prepare for an audit. According to the IRS, an average of 8.5 percent of the people in this income bracket will be audited.

3. Home office deduction. If you truly use your home office exclusively for business be prepared to prove it. This often-misused deduction can also trigger an IRS audit. So, if your office is also your guest bedroom, maybe you want to rethink taking this deduction.

4. Reporting incorrect income. Did you remember to report all of your income? The IRS gets a copy of all W-2 and 1099 forms. The IRS compares these documents on a random basis to income reported on tax returns. If there’s a discrepancy, expect an audit. Because of this, if you receive an inaccurate tax document, be sure to get it corrected before you file your taxes.

5. Certain industries. Those who work in some industries, primarily those that deal in cash, like beauty salons, home contracting and restaurants, are more likely to be audited than those who work in other types of jobs.

Taxes are a fact of life. Knowing which areas of your return are likely to draw the attention of the IRS can help you prepare for next year.

 

For more information on your tax return and charitable donations, visit www.irs.gov. Please contact our office at (941) 906-1231 for an initial consultation if you need legal advice.

September 16, 2013
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Attorney Sean M. Byrne to Speak About Trail Easements at National Conference

By Firm News, Land Conservation Easements

Attorney Sean M. Byrne will present a seminar at the annual national conference of the Land Trust Alliance (LTA) about the use of public trail easements to encourage support for land conservation.   The LTA conference will be held in New Orleans next week from Sept 17-19.  Byrne will showcase Sarasota County’s ‘river to river trail’—an interconnected network of outdoor recreational trailways stretching from the Peace River to the Myakka River that Sarasota County will be developing.  Byrne represented Sarasota County in the acquisition of portions of the trail network, some of which are easements across privately owned working ranches.   The seminar will give recommendations to real estate lawyers and land conservationists on how to incorporate trail easements in conservation easement transaction, particularly when public funds are used to acquire the conservation easements.

September 9, 2013
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Supreme Court DOMA Decision Affects Estate Planning for Same Sex Spouses

By Elder Law, Estate Planning, Tax Law

The Supreme Court of the United States’ ruling that a portion of the Defense of Marriage Act (“DOMA”) is unconstitutional may allow same sex spouses who were legally married under state law at the time they filed individual Federal income tax returns to amend past tax returns and receive a refund.  The DOMA ruling’s implications will also affect the gift and estate tax marital deduction, portability of a spouse’s estate and gift tax credit, retirement benefits, and the future tax filing status for same sex spouses.  Many tax experts believe that the Court’s ruling has retroactive effects.  This means that same sex spouses may be able to amend previous tax returns to claim refunds for prior tax years if the taxpayers can show that they would have paid less if the marriage had been recognized by the IRS.  Same sex couples can contact tax expert Fred Jacobs at Bach & Jacobs to review the effect that the Supreme Court’s decision may have on their federal taxes.

September 5, 2013
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What is the Effect of Prior Gifts on Inheritances?

By Elder Law, Estate Planning, Tax Law

Question: My widowed father recently died and his will directed that his estate should be split between my brother and me.  My brother is well off, where I have struggled financially.  To help me out over the last few years my dad gave me his car and several cash gifts.  Will those prior gifts be counted against my inheritance or will my brother and I still split the existing assets dad had at his death?

Answer: Whether those prior or “inter vivos” gifts will be counted against your inheritance depends on whether your father made a written declaration contemporaneous with the gifts that they were “advancements” against your inheritance.   If he did, or if you acknowledged in writing that they were indeed advancements to be counted against your inheritance, then the value of the car and cash at the time you received it could be used to reduce your inheritance after your father’s death.  Otherwise, these lifetime gifts are ignored and the assets remaining in your father’s estate are split equally upon his death.  To avoid confusion, it is best if your father had documented these gifts in writing.  Any lifetime gifts to an individual totaling greater than $14,000 in a calendar year should be reflected on your father’s tax returns.  The team at Bach & Jacobs assists families in administering estates after the passing of a loved one.  Contact Bach & Jacobs at (941) 906-1231 if you need assistance with probate administration.

August 29, 2013
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Tax Advantages of Being a Florida Resident

By Tax Law

 There are many of tax advantages to being a resident of the State of Florida:

1.No state inheritance tax

2.No Florida state income tax

3.Can declare Florida residence as homestead.

4. Discount on real estate tax means first $50,000 tax free and a 3% annual cap

5. Plenty of sunshine to enjoy!

 

If you need legal advice for estate planning, Asset Protection Planning, or tax planning, please contact our office at (941) 906-1231 for an initial consultation.

August 26, 2013
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Congratulations to Attorney Fredric C. Jacobs on Prestigious Award from Stetson Law

By Firm News

 On August 14, 2013, Florida Board Certified attorney Fredric C. Jacobs was honored with the “Distinctive Service as an Adjunct Law Professor” award for his service to the students and community of Stetson Law over the past five years. Mr. Jacobs has been practicing law for over forty years and has been committed to the learning and development of the up and coming legal minds of Stetson Law. We appreciate his dedication and are proud to have him as part of our Bach & Jacobs team.

If you need legal advice for estate planning, probate and trust administration, Medicaid planning, or VA benefits, please contact our office at (941) 906-1231 for an initial consultation.

August 22, 2013
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What Happens if You Pass Away Without a Will or Trust?

By Elder Law, Estate Planning, Probate

Assets pass to the family members the state presumes to be the intended heir. If you pass away with a spouse and children surviving you, 100% of your estate would go to your spouse. If you pass away with a spouse and children from a previous relationship(s), 50% of your estate will go to your spouse and 50% of your estate would be divided among your children.

If you need legal advice for estate planning, Asset Protection Planning, or tax planning, please contact our office at (941) 906-1231 for an initial consultation.

August 21, 2013
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What Determines a Disabled Adult Child and What Social Security Benefits Can They Receive?

By Government Benefits

Disabled Adult Child (DAC) is an adult child who has a disability that began before they became 22 years old.

 What is the social security benefit for a Disabled Adult Child when a parent retires?

The benefit is based on 50% of parent’s retirement benefit.

Example: If the parent’s retirement benefit is $1500, the disabled adult child would be eligible for $750.

 If the child is currently receiving income at the current SSI rate of $710 and he/she is eligible for $750, SSI goes away and the child receives the higher amount.

If the child’s eligibility is less than the current SSI rate of $710, a calculation of SSI and retirement benefits would take place.

For example: Parent’s retirement benefit is $1400, the disabled adult child is eligible for $700. The child would receive $30 in SSI benefits and the remaining $680 would be paid from the retirement benefits.

 What social security benefits does a Disabled Adult Child receive when a parent dies?

The benefit is based on 75% of parent’s retirement benefit.

Example: If the parent’s retirement benefit was $1500, the disabled adult child would be eligible for $1125.

What happens when the remaining parent of Disabled Adult Child retires or dies?

 If the surviving parent had a higher earnings record, they should contact Social Security Administration to apply to switch over for the higher benefits.

 If you need legal advice for estate planning, probate and trust administration, Medicaid planning, or VA benefits, please contact our office at (941) 906-1231 for an initial consultation.

August 21, 2013
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What is a Thrift Savings Plan?

By Asset Protection Planning, Tax Law

 A thrift savings plan for federal employees and members of the armed services is like a 401K plan, rather than an IRA. It is funded with pre-tax contributions by the participant out of their paycheck.

Participants can borrow against their account balances and the repayments are deducted from their pay checks.

If over age 59.5, participants can withdrawal their balances while in service without penalty. If under age 59.5, withdrawals can only be made for financial hardship.

Upon separation from the service, the participant can roll over the account balance or withdraw the balance in installments or in a lump sum. If under age 59.5, the withdrawals upon separation of service will result in a penalty if not rolled over. Another alternative upon separation of service is to keep the money in the thrift savings plan until age 70.5, at which time the entire account has to be withdrawn or rolled over.

This is all pre-tax money and will be subject to income taxes when the account is liquidated.

For more information on your tax return and charitable donations, visit www.irs.gov. Please contact our office at (941) 906-1231 for an initial consultation if you need legal advice.

August 21, 2013
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How Will the Affordable Care Act change Health Insurance Plans?

By Health

The Florida Office of Insurance Regulation has compiled data on Projected Health Insurance Premiums for policies that comply with the Patient Protection and Affordable Care Act (PPACA) available in the individual health insurance marketplace beginning in January.

 

Click this title: “Individual Monthly Health Insurance Premiums Before and After PPACA” to link to the document.

A news release stated that the office utilized two methods for calculating potential premium increases. The first used a hypothetical mid-level “silver plan” created by using adjustments to a standard plan in Florida, and compared this to actual silver plans filed. This resulted in an average 35.2 percent increase.

 

A second method compared company projected premiums to a marketplace average for policies without the 2014 PPACA provisions. This resulted in an average 39.3 percent increase. Neither method incorporated potential federal subsidies or credits that might be available to individuals.

 

These documents will continue to be updated as more plans are reviewed and accepted by the office, which intends to release data for PPACA small group premiums in the near future.

If you need legal advice for estate planning, probate and trust administration, Medicaid planning, or VA benefits, please contact our office for an initial consultation.

August 19, 2013
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