940 Saratoga Ave.
Suite 108
San Jose, CA 95129
(408) 252-6810 Phone
(408) 252-0821 Fax

BTB Notes & News

I write this letter on a Saturday afternoon, looking around the office, counting all the blessings we have. The constant news feeds remind us of all the bad out there, and we know no family is immune to some level of pain and suffering. But on a personal level the BTB family experienced more than its share of challenges this past year, starting with the passing of BTB's founder, Jim Monnie, last August. That was followed by three of our families' fathers passing during 2015, an overseas emergency for another one's dad, the diagnosis, and hopefully successful treatment, of another's dad, and my own children's father's health challenges. Every family in our office had dad impact. But through our strength and community we are able to get through these challenges and recognize we have had so much to be thankful for, and will continue to be thankful for as we look forward to the new year, no doubt with its own set of challenges and opportunities.

 

Because our work is so interwoven with our lives the impacts in one affect the other, and this year provided many examples of that. So one of the opportunities this year was a chance to reflect on our goals and values, both personal and professional. As we approach year end there are things we as an office are considering implementing and providing to enhance the service and value you have come to expect from us and will continue to have with us. Some of these might be baby steps, some of them might be more robust right off the bat. But we are committed to ensuring we are available for all of our clients' wants and needs, whether it be for the short period we get to see some of you during tax season, or for the others of you we get to see more often.

 

From an income tax perspective, in general what to prepare for this year is similar for most years. For those who have not maxed out on employer sponsored retirement plans, consider putting most or all of your last paychecks into those programs. At the minimum you should be taking advantage of any company matching! If you have flexible spend plans make sure to take full advantage of them before December 31st. If you itemize (have a Schedule A) clean out those closets and garages before year end to make room for all the loot Santa is going to bring you. Donate those items to the charity of your choice and make sure to get a receipt.

 

For those self-employed, rental property holders, or owners of other businesses on a calendar year end, put off constructive receipt of income if you can, and pull in expenses before year end. If you are making quarterly estimated tax payments and are not subject to AMT make sure you get your Q4 state estimate postmarked by December 31st. If you engage us to assist you with filing your 1099s make sure to get your information in to us no later than Friday January 15th. Remember, landlords are required to issue 1099s to all self-employed subcontractors they pay over $599 in any year (gardeners and janitors are the most often missed).

 

The biggest impact to compiling returns last year was the implementation of the Affordable Care Act. We saw lots of growing pains from Covered California (CC), including many people receiving late or incorrect Form 1095-A's. This caused us to file a larger than usual number of amendments and extensions this past year. In addition, people started to see penalties for non-coverage, and this year those penalties may increase for some. The last thing I would say about this right now would be that if you are enrolled through CC and are receiving a premium assistance, make sure you update your income projections if they change during the year. We saw too many people last year have to pay back some of those premiums, which caused refunds to drop and in some cases large payments back to them.

 

As you know from our prior year end letters, this is by no means a complete or comprehensive list. There are lots of deductions, credits, and other strategies available to many of us, the above simply reflects a few general ideas. Give us a call or drop us an email if we can help with anything or answer any questions. Be patient with us as we approach this year end, our office hours will be cut short for the holidays. However, we will be back in the office in full force Monday January 4th, preparing for and looking forward to seeing all of you in the next few months.

 

Your BTB Staff

 

Don't Be A Victim or Let Others Become One

 

From the IRS website:

 

Scam phone calls continue; IRS identifies five easy ways to spot suspicious calls.

 

The Internal Revenue Service issued a consumer alert providing taxpayers with additional tips to protect themselves from telephone scam artists calling and pretending to be with the IRS.

 

These callers may demand money or may say you have a refund due and try to trick you into sharing private information. These con artists can sound convincing when they call. They may know a lot about you, and they usually alter the caller ID to make it look like the IRS is calling. They use fake names and bogus IRS identification badge numbers. If you don't answer, they often leave an "urgent" callback request.

 

"These telephone scams are being seen in every part of the country, and we urge people not to be deceived by these threatening phone calls," IRS commissioner John Koskinen said. "We have formal processes in place for people with tax issues. The IRS respects taxpayer rights, and these angry, shake-down calls are not how we do business."

 

The IRS reminds people that they can know pretty easily when a supposed IRS caller is a fake. Here are five things the scammers often do but the IRS will not do. Any of these five things is a tell-tale sign of a scam. The IRS will never:

 

  1. Call you about taxes you owe without first mailing you an official notice.
  2. Demand that you pay taxes without giving you the opportunity to appeal the amount they say that you owe.
  3. Require you to use a specific payment method for your taxes, such as a prepaid debit card.
  4. Ask for credit or debit card numbers over the phone.
  5. Threaten to bring the local police or other law-enforcement groups to have you arrested for not paying.

 

If you get a phone call from someone claiming to be from the IRS and asking for money, here's what you should do:

 

  • If you know you owe taxes or think you might owe, call us at 408-252-6810, we'll see if we can help you. Otherwise, call the IRS at 1-800-829-1040. The IRS workers can help you with a payment issue.
  • If you know you don't owe taxes or have no reason to believe that you do, report the incident to the Treasury Inspector General for Tax Administration (TIGTA) at 1-800-366-4484 or at www.tigta.gov.
  • You can file a complaint using the FTC Complaint Assistant; choose "Other" and then "Imposter Scams." If the complaint involves someone impersonating the IRS, include the words "IRS Telephone Scam" in the notes.

 

Remember, too, the IRS does not use unsolicited email, text messages or any social media to discuss your personal tax issue. For more information on reporting tax scams, go to www.irs.gov and type "scam" into the search box.

 

Contact us if you have any questions.

 

How Long Do I Need To Keep My Tax Records?

 

There are many records and documents, such as your W-2, 1099 interest and dividends statements, and so on, that support the numbers you put on your tax return. You'll need these documents should the IRS select your return for audit. Most IRS examinations go smoothly and quickly if you are well organized and can produce support for any numbers in question. On the other hand, audits can become a nightmare if you're unprepared and can't prove what's been reported. The first step to being prepared is to organize the records at the time you're preparing the return and then keep them with your return. If some of your records need to be stored in other locations, make a copy of the document for your tax return file. If you get questioned, trying to reassemble records after a couple years have passed by can be time consuming and stressful.

 

Records you should keep include bills, credit card and other receipts, invoices, mileage logs, canceled, imaged or substitute checks, proofs of payment, and any other records to support the deductions or credits you claim on your return. How long you need to keep these records depends on the circumstance. The general rule, which follows the statute of limitations, is to keep your tax returns a minimum of three years from the extended due date of the return. There are a number of exceptions to the three year rule. For example, if the document will affect a future tax return, such as the purchase of real estate, the three year rule won't start until the transaction closes, that is when you sell the real estate. Documents, such as a medical bill, affecting only the current year can usually be destroyed after three years from the extended due date of the return.

 

Being able to properly support your tax return is important. What to keep and how long you will need to retain your documents can be confusing. Your tax preparer is familiar with your return and can answer your questions taking into consideration your specific situation.