What is a 1031 exchange? A 1031 exchange is something that anyone who owns multiple pieces of business property will want to consider.  A 1031 exchange is one of the more complicated procedures available for real estate investors; It is always recommended to consult a CPA to ensure that all IRS regulations are being met.  The simple premise behind a 1031 exchange allows a property owner to roll their proceeds from one investment property into one or more similar investment properties.  Why is this such a big deal though?  This allows you to defer paying taxes on the gain, instead using that money to purchase larger investment property.  A financial intermediary is used to conduct the transaction so the taxpayer, technically, never receives the funds. There are specific guidelines for the time period in which a 1031 exchange can be conducted. A 1031 exchange will only be useful for taxpayers that own business or rental property. A personal residence is not applicable for an exchange.

If you are interested in selling or upgrading your business or rental property and would like more information on a 1031 exchange transaction please contact the CLloyd Group.

There are tax benefits available for military personnel and families. These tax benefits are often overlooked.  For example, any monthly military pay earned while in a combat zone, or any hostile fire and imminent danger pay are tax exempt.  Certain requirements by the military, such as certain uniforms or equipment purchased, can be deducted. Any moving costs can be partially written off as well. This is a great tax benefit for members of the military that jump base to base quite frequently.  This benefit applies to temporary moves as well. Travel expenses for performance of reserve duties over 100 miles away are deductible as well.

Because of the stress and high demands associated with military life, the IRS offers extended deadlines for any military personal to file their tax returns or pay tax liabilities.  The IRS publication 3, Armed Forces tax guide is filled with useful information, outlining many of the tax benefits available for military personnel and families. Please contact the CLloyd Group for your FREE GUIDE. Even if you’re going to be leaving the armed forces, this is worth looking into as there are even deductions available for anyone who is making the transition back into civilian life, such as certain job searching expenses may be deductible as well.

For additional information or questions on the tax benefits available for military personnel and families please contact the CLloyd Group. Be sure to ask about our military discounts!

As hurricane season approaches, it is a good reminder to review the procedures in place that safeguard your tax records. Unfortunately more often then not this advice tends to get ignored. Now more then ever it is incredibly easy to safeguard tax records thanks to how much technology has advanced. What makes it so easy to safeguard tax records now is the fact that everything can be done digitally, so there is no longer the need to have physical copies of documents. Electronic backups are much easier to track and organize. USB flash drives, portable hard drives, and web-based document management systems are a great way of storing electronic documents, such as insurance statements, bank records, and tax returns.

Along with electronically storing your documents you should retain some type of photographic or video evidence of anything in your home, most notably anything that is particularly valuable. Again, this is something that tends to get dismissed by people, but if there’s ever something like flood damage or a fire where the majority of a house’s contents are going to get damaged having proper documentation is a huge deal and will greatly help to speed up and guarantee that any insurance claims will not get dismissed. Digital pictures and videos can be easily stored electronically along with any important documents, meaning in the case of an emergency you can just grab one flash drive or portable hard drive and not have to worry about dashing into an office and grabbing a bunch of different folders and physical copies of documents.

Updating emergency plans is another simple thing that gets overlooked in the business world. At least once a year it is worth taking the time to go over any emergency plans for employees. Any new employees should always be advised when they start their jobs. Any big company changes are worth addressing as well.

If there is ever a disaster and you are affected, you can request previously filed tax returns by filing Form 4506, Request for Copy of Tax Return. Taxpayers can also request tax transcripts online from the IRS Website. There is no reason not to safeguard tax records in this digital age, and the last thing that you want to happen is for a disaster to become even more devastating, especially when there are so many simple options to protect your most important information. For further assistance and advice on safeguarding your important documents please contact the CLloyd Group.

There are tax deductions for job search expenses available to taxpayers that meet certain guidelines by the IRS. These job search expenses are also subject to a threshold based on the taxpayer’s income.

In order to be eligible for a deduction, your expenses have to be spent searching for a job in your current field of employment. Programmers have to look for programming jobs, writers have to look for writing jobs, chefs have to look for cooking jobs etc. These deductions will also not apply for anyone who is looking for their first job, or for someone who has a large gap in their employment history.

One possibility in obtaining a new job is moving to a new location. If you are traveling to look for a new job you can deduct these travel expenses as long as you were traveling primarily to secure a new job. If you were to spend a week vacationing and have one interview you are not eligible to deduct your travel expenses.

If you are unemployed and searching, or recently changed jobs and wondering if your expenses are tax deductible, please contact the CLloyd Group immediately for a FREE consultation.

As a self employed individual, it is often difficult for taxpayers to purchase and maintain their own health, dental, and long-term care insurance. Health insurance becomes even more expensive when you add a spouse and a dependent as well. There are some tax deductions available to help alleviate this expense for self employed individuals and their families.

The IRS has several requirements that must be met in order for self employed individuals to claim these tax deductions:

• The taxpayer must have a net profit on Schedule C from business or Schedule F from farming
• A partner reporting net earnings from a K-1 must show a profit for the year

There are also certain stipulations regarding the insurance plan, whether it is under your name or the business. If you are self employed and paying health insurance premiums, or thinking about starting your own business and would like more information on tax deductions for health insurance please contact the CLloyd Group.

If you have recently sold your home, or are in the process of selling your homes there are a few tips that the IRS wants to remind all sellers.  The most important is the ability to deduct up to $250,000 on any income gained from selling your house, $500,000 if you’re filing a joint return.  If you can exclude all of the gain then you don’t need to report the transaction of selling your home on your tax return at all.  If your gain cannot be excluded, then the portion above the $250,000 or $500,000 will be considered taxable income.

On the other hand, if you sell your home at a loss you may not deduct this amount on your tax return.  For anyone who owns more then one home you are only able to exclude the gain from the sale of your main home.  You must pay taxes on the gain from selling any home that isn’t your main residence. Your main residence is the one that you spend the most time in. There are several tests for this.

Recipients of the first time home buyer credit are required to own and live in the house for 36 months after the date of purchase. If the owner moves from the house within the first 36 months, the owner will be responsible for paying back a portion of the homebuyer credit that was issued.

If you are planning on selling your home or other property please contact the CLloyd Group for more information on the tax consequences of the transaction. We will also be able to set you up with an expert broker to conduct a FREE Appraisal and assist you with your sale.

Have you checked out the IRS Website lately? I’m sure you have it bookmarked and read the news and publications routinely like me. Okay, that may not be true for all of you since the Code can be pretty dry and difficult to translate. Anyway, this time of year you may find yourself making periodic visits to the site. Here are some helpful features and links that are worth checking out:

Calculate the right amount of withholding from your pay check with the W-4 Calculator Often times when a client who is an employee that has a tax liability due at the end of the year can prevent owing in the next year by simply adjusting their withholdings on their W-4 form. This calculator will help walk you through the process.

Get all the latest information from the IRS Newsroom Learn about tax laws that may affect your tax return. This section is helpful whether you are an individual taxpayer or business.

I encourage you to check out the IRS website if you are interested in utilizing these features or learning more about taxes. If you have any questions regarding your tax situation or filing please feel free to contact us.

As the tax season officially begins, the IRS has announced that the tax deadline for individual taxpayers has been extended to April 17, 2012. Taxpayers will have until Tuesday, April 17, 2012 to file and pay any taxes due since April 15 is a Sunday. The DC holiday of Emancipation Day is observed on the next day. Taxpayers that request extensions will have until October 15, 2012 to file their tax returns. Remember, just because you have two extra does not mean you should wait until the last minute to file your taxes.

Contact the CLloyd Group today to get started!

The IRS encouraging tax professionals and taxpayers, in general, to help spread the word of the Earned Income Tax Credit (EITC). As a CPA, I am doing my part to make a blog post on my website and spread it via various social media. I am encouraging you to repost, retweet, etc to help spread the word to fellow taxpayers as well.

The EITC is a refundable tax credit that can return as much as $5,751 to taxpayers earning less than $49,000. Essentially, the IRS will give money to working individuals and families that earn less. This tax credit is not automatic. Individuals and families will receive this tax credit when they file their tax return. The Earned Income Tax Credit is often overlooked in many self-prepared tax returns. Please contact the CLloyd Group for more information and to see if you are eligible for this tax credit.

Please do your part as taxpayers of this wonderful country and help inform others of the Earned Income Tax Credit.

There is a lot that you may not know about the Massachusetts Cigarette Excise Tax and the penalties associated with purchasing or possessing “unstamped cigarettes” under Massachusetts law.

It is no secret that Massachusetts residents at the state border will likely purchase their cigarettes and other tobacco products in the neighboring state to avoid the state tax. Over the years, it has become even easier to purchase cigarettes online and have them shipped to your home to avoid paying the excise tax on cigarettes. This has become a cheaper and more convenient option for smokers in Massachusetts, but did you know this is illegal?

From the Massachusetts Department of Revenue:

It is illegal for Massachusetts residents to possess cigarettes if the cigarette packs do not bear the Massachusetts excise stamp. Unlawful possession of unstamped cigarettes may be subject to civil penalties of up to $5,000, and criminal penalties of up to 5 years imprisonment and up to a $5,000 fine.

Commonwealth residents that purchase cigarettes from online retailers are reported to the Massachusetts Department of Revenue by the retailers. This notice informs the Mass DOR of residents that have dodged the state excise tax of $25.10 per carton. These tax dodgers are required to file a Form CT-11B Non-Stamper Cigarette Excise Return to pay the outstanding excise tax on their online cigarette purchases during the year. When residents fail to file and pay the cigarette excise tax the Department of Revenue will issue a bill for the tax, interest, and penalties.

Initially I thought this law would not be strictly enforced and it would be difficult for the Mass DOR to monitor the recipients of online cigarette purchases. I have had several clients present to me notices from the Mass DOR for taxes they owe for previous online cigarette purchases. Some of these were fairly large bills. For those of you that continue to purchase cigarettes online, please do so with caution and keep in mind that you will ultimately be liable for the MA cigarette excise tax that you are trying to avoid.