Fraudulent Tax Returns

Ten Forty Plus Quality Tax Preparation & Financial Services #2 Inc 5625 Cypress Creek Parkway Ste 321, • Houston, TX 77069 Phone: (281) 397-7777 • Phone: (281) 397-3535 joeb@tenfortyplus.com • www.tenfortyplus.com What did thieves try to steal? Along with tax season comes the season of tax identification theft. Those who have become victims know how frustrating the experience can be. The frustration Until now, if you were a victim of tax identity theft, you would be unable to receive information from the IRS about the depth of the fraud. Many frustrated taxpayers have tried to get copies of the fraudulently filed tax returns. The IRS has repeatedly refused freedom of information requests to get these copies. What’s new? In a recent announcement, the IRS has changed course on requests to get copies of fraudulently filed tax returns. As long as you follow their instructions, you are now able to get copies of what thieves attempted to do with your tax information. But be forewarned. The IRS may black out information on the requested return that does not pertain to you. They will try to present you with enough of the falsely filed tax return to allow you to determine the depth of the data that has been stolen. Why the theft information may be important You can see what personal information the thieves have. What has been compromised? Name, address, and Social Security Number? Do they have your dependent’s or spouse's information? Perhaps they also have your income and withholding data. Knowing this will help you plan the extent of data protection you will need. There may be clues as to where the identity theft occurred. Of the information stolen, who had access to it? Did the data breach of your identity happen through the IRS or somewhere else? There may be more tax years impacted than you thought. Request information from the year you first became aware of the identity theft at the IRS. But you may wish to request information in a prior year and in the year following the theft. The IRS has access to up to six years of tax returns. Try to determine whether the theft is ongoing is a one-time occurrence. The request requires specific information. Here is a link to the IRS announcement: Instructions for Requesting Copy of Fraudulent Returns Thankfully, the IRS’ recent decision to share this fraudulent information is allowing victims to take some action to protect themselves. Questions about your financial situation? Contact Ten Forty Plus Quality Tax Preparation & Financial Sign up for informative emails Joseph C Becker EA Licensed to Practice before the IRS Ten Forty Plus Quality Tax Preparation & Financial Small Business & Individual Experts 5625 Cypress Creek Parkway Ste 321, • Houston, TX 77069 Phone: (281) 397-7777 • Phone: (281) 397-3535 joeb@tenfortyplus.com • www.tenfortyplus.com

Get more mileage from your business car

Ten Forty + Quality Tax Preparation & Financial Services 281-397-7777 Fax 281-397-7443 Tax Tips Get more tax mileage from your business car Now that 2018 models are in the showrooms, you may be shopping for a new car for your business. Be aware that you can use one of two methods, the actual expense method or the standard mileage rate, to deduct business auto expenses (other special rules apply to leased car deductions). Although the actual expense method is more work, it could provide a bigger deduction. Here's a quick recap: Actual expense method: This encompasses all your expenses: oil, gas, repairs, insurance, tires, registration fees and licenses, as well as a generous Section 179 and/or depreciation allowance. Keep in mind that there a special rules limiting annual write-offs for cars deemed "luxury cars" by the IRS. The deduction is based on your percentage of business use. Standard mileage rate method: Alternatively, you can use the IRS-approved standard rate, which is 53.5 cents per business mile in 2017 and adjusted annually. You can also tack on the cost of business-related tolls and parking fees to the standard rate. Both methods require detailed recordkeeping for business trips, but the standard mileage rate can be less of a hassle because you don't have to keep track of every expense. Nevertheless, the extra work may be worthwhile. In particular, you may benefit from a Section 179 and/or depreciation allowance, including 50 percent "bonus depreciation," in the first year of ownership if you use the actual expense method. With the standard mileage rate, the cost of depreciation is accounted for in the annual rate prescribed by the IRS. Which mileage rate is best for you depends on your situation. We can help you do the math to find the best tax result. Please call us if you have any questions. 2016 Tax Extension Deadlines are approaching. Go to www.tenfortyplus.com and complete your online organizer (under forms and documents). Make your appointment using our online appointment system. Call 281-397-7777 and get a user id with password set up so you can send us all your information through our online secure portal and do your taxes from the comfort of your home or office or come see us at our office. 1040 + Quality Tax Preparation & Financial Services Joseph C Becker EA www.tenfortyplus.com 281-397-7777, Fax 281-397-7443 joeb@tenfortyplus.com Contact Us There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves summarizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following: • Pension or IRA distributions. • Retirement. • Significant change in income or • Notice from IRS or other deductions. Revenue department. • Job change. • Divorce or separation. • Marriage. • Self-employment. • Attainment of age 59½ or 70½. • Charitable contributions • Sale or purchase of a business property in excess of $5,000. • Sale or purchase of a residence or other real estate.

Municiple Bonds

Ten Forty + Quality Tax Preparation & Financial Services 281-397-7777 Fax 281-397-7443 Tax Tips Four tax incentives of municipal bonds In today's tax environment, nothing is certain. However, as things stand now, high-income taxpayers may continue to value municipal bonds ("munis") and muni bond funds. Just consider these four tax incentives. Interest income from munis is exempt from federal income tax. This is a major benefit to taxpayers in the top tax brackets, especially when compared to taxable investments. For example, to someone in the top 39.6 percent tax bracket, a AAA-rated muni earning 4 percent is preferable to a taxable corporate bond earning 5 percent. Interest income from munis is exempt from state income tax if issued by a municipality or other authority within your state. This is a significant "double tax break" for residents of high-tax states. Interest income from munis doesn't count toward your adjusted gross income (AGI) for tax return purposes. This could increase certain tax benefits, such as deductions for medical expenses or charitable gifts, or avoid cutbacks. Interest income from munis doesn't count in the tax calculation of the net investment income tax (NII). Currently, a 3.8 percent surcharge applies to the lower amount of your NII (which includes most investment income items) or modified adjusted gross income (MAGI) above $200,000 for single filers and $250,000 for joint filers. While these tax incentives exist, this should not lead you to believe munis are completely tax-free. For example, if you buy certain munis, called "private activity bonds," it may create alternative minimum tax (AMT) complications. You will owe capital gains tax when you sell munis at a profit. Also, remember that there's more to investing than just taxes. Take all the relevant financial factors into account, including the suitability of munis in your portfolio. The rules related to munis are complex and can change. Please call us if you have any questions. 2016 Tax Extension Deadlines are approaching. Go to www.tenfortyplus.com and complete your online organizer (under forms and documents). Make your appointment using our online appointment system. Call 281-397-7777 and get a user id with password set up so you can send us all your information through our online secure portal and do your taxes from the comfort of your home or office or come see us at our office. 1040 + Quality Tax Preparation & Financial Services Joseph C Becker EA www.tenfortyplus.com 281-397-7777, Fax 281-397-7443 joeb@tenfortyplus.com Contact Us There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves summarizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following: • Pension or IRA distributions. • Retirement. • Significant change in income or • Notice from IRS or other deductions. Revenue department. • Job change. • Divorce or separation. • Marriage. • Self-employment. • Attainment of age 59½ or 70½. • Charitable contributions • Sale or purchase of a business property in excess of $5,000.

Child Care Credit

Ten Forty + Quality Tax Preparation & Financial Services 281-397-7777 Fax 281-397-7443 Tax Tips Going back to school? What you need to know about the child care credit A couple can claim the Child and Dependent Care Credit — commonly called the "child care credit" for short — if they pay someone to watch the kids while they're at work. But suppose one spouse plans to go back to school this fall. Can you still claim the credit? It depends. Generally, the credit is equal to 20 percent of the first $3,000 of qualified expenses related to caring for one child under age 13, or $6,000 for two or more children underage 13. Therefore, your maximum credit is typically $600 for one child and $1,200 for two or more children. A higher percentage is available for certain low-income taxpayers. What expenses qualify for the child care credit? The credit can be claimed for: Babysitters Day care centers Nursery schools Summer day camps (but not overnight camps) How do you qualify for the child care credit? To qualify, the expenses will need to have been incurred for you and your spouse to be "gainfully employed." A married couple is gainfully employed if one spouse works full time and the other works full time, part time or is a full-time student. A full-time student attends classes for at least five months (not necessarily consecutive) out of the year. Say your spouse took a four-week course earlier this year and now has enrolled full time at college, beginning in September. You'll end up with child care costs because your spouse will be at school and you work full time. That means you might claim the child care credit, subject to the usual limits. One more thing to remember — the qualified expenses are further limited to the earned income of the lower-earning spouse. This could affect couples where one spouse attends school. During the months a spouse is a full-time student, the tax law presumes an earned income of $250 for one child and $500 for two or more children. Please call us if you have any questions. 2016 Tax Extension Deadlines are approaching. Go to www.tenfortyplus.com and complete your online organizer (under forms and documents). Make your appointment using our online appointment system. Call 281-397-7777 and get a user id with password set up so you can send us all your information through our online secure portal and do your taxes from the comfort of your home or office or come see us at our office. 1040 + Quality Tax Preparation & Financial Services Joseph C Becker EA www.tenfortyplus.com 281-397-7777, Fax 281-397-7443 joeb@tenfortyplus.com Contact Us There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves summarizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following: • Pension or IRA distributions. • Retirement. • Significant change in income or • Notice from IRS or other deductions. Revenue department. • Job change. • Divorce or separation. • Marriage. • Self-employment. • Attainment of age 59½ or 70½. • Charitable contributions • Sale or purchase of a business property in excess of $5,000.

Get Paid to Hire your Kids

Ten Forty + Quality Tax Preparation & Financial Services 281-397-7777 Fax 281-397-7443 Tax Tips Get Paid: Hire Your Child I’ll give you $3,003 if you will pay your child $6,350 to work for you. Would you be interested in this proposition? That’s what federal and state governments paid Sara Jackson when she paid her 13-year-old child $6,350 to work in her Schedule C business. Had Sara operated her business as a corporation, state and local governments would have paid her corporation $1,650. The $3,003 that Sara received and the $1,650 that the corporation would have received came from the built-in hiring-your-child tax breaks that we discuss in this article. And depending on you and your family, you can generate numbers vastly exceeding the $3,003 and $1,650. Zero Taxes for the Child First, let’s examine Sara’s child. The child pays zero federal taxes on the $6,350 of earned income. Wow! That’s nice. Sara gets the tax deduction and pockets $3,003, and her child has $6,350 in tax-free dollars. What makes the child’s taxes zero? The standard deduction—this is the deduction in lieu of itemizing deductions for mortgage interest, property taxes, charitable contributions, etc. The 2017 standard deduction for a single taxpayer is $6,350. Note This All the money remains in the family. Sara paid her child $6,350 in wages. The child has that money. The federal and state governments paid Sara $3,003 in tax cash (refunds or reductions in taxes). The family has all the money: $9,353 ($6,350 + $3,003). Why Hire Your Child? Hiring your child gives you the opportunity to work with someone you know, love, and trust. If you give money to your child and/or plan to help your child pay for college, the hire-your-child strategy is a big assist. First, you get a tax deduction for the wages, whereas just giving money to your child has to come from aftertax dollars. Second, your child can put earned income into either a traditional or a Roth IRA. That money grows tax-free. If the child wants to use the money for college, he or she can take the money from the IRA, penalty-free. This is a huge break. Pay More, Say $11,850 Say Sara wants to pay her child $11,850 and keep it tax-free for her child. Is this possible? Yes. Here is how the child gets to zero federal taxes: · The child puts $5,500 in a tax-deductible traditional IRA. · The $6,350 standard deduction eliminates the remaining $6,350. There’s nothing left to tax. And here’s how Sara benefits. The federal and state governments pay Sara $5,132 in after-tax cash for hiring her child. Pay Even More—Say, $21,175 If Sara pays her child $21,175, and he puts $5,500 in a tax-deductible traditional IRA, the child’s federal tax is $933 and state tax is $220.3 After taxes, the child has $20,022 ($5,500 of which he has in the separate IRA account). With this W-2 payroll, the federal and state governments pay Sara $10,016 in after-tax cash (14 percent in selfemployment tax savings, 28 percent in federal income tax savings, and 5.3 percent in state income tax savings). Big Picture—Mechanics Let’s look at what happens with Sara and her son: 1. Sara writes W-2 payroll checks to her son totaling $21,175. She is out this cash. The child now has $20,022 of this cash, and the governments have the remaining $1,153, which they collected in taxes from the child. 2. Sara’s federal and state tax benefits from her $21,175 W-2 wage to her son create after-tax cash money of $10,016. She puts this money in her bank account. 3. Sara’s son has taxable income after the IRA and standard deductions creating a total tax of $1,153, leaving him with $20,022, $5,500 of which is in the IRA. Note that the family has $30,038 at this point ($20,022 + $10,016). What Happened to the Payroll Taxes? Payments for the services of a child under age 18 who works for his or her parent in a trade or business are not subject to Social Security and Medicare taxes if the trade or business is taxed as a sole proprietorship or a partnership in which each partner is a parent of the child. The parental proprietorship and partnership hiring rules also exempt wages paid to a child under the age of 21 from unemployment taxes. If you operate your business as a single-member LLC taxed as a proprietorship or as a spouse-only LLC taxed as a partnership, the IRS allows the beneficial parental treatment of payroll taxes. For more on how this works, see IRS Now Says No Payroll Taxes on Family Employment in a Single-Member LLC. Corporate Treatment Is Different Corporations do not qualify as mothers or fathers of the children, and therefore the payroll breaks do not apply to wages paid by the owner’s corporation to the owner’s children. In the introductory part of this article, we mentioned that had Sara operated as a corporation, the net tax benefit of the corporate hire would have been $1,650, compared with a tax benefit from the proprietorship’s hire of $3,003. That difference in benefits reflects the Social Security and Medicare taxes inflicted on both the corporation and the child, as well as the unemployment taxes inflicted on the corporation. Choice of Entity Consideration The difference in tax benefits when you hire one or more of your children is one of the differences that you need to consider when choosing an entity for your business. Depending on your choice of operating entity, here are three things to know: 1. Putting your under-age-18 children to work in your proprietorship or a spouse-only partnership pays off for both the owners and the children. 2. Putting your under-age-18 children to work in your S corporation or C corporation also pays off, but to a lesser extent because of the payroll taxes. 3. The difference in benefits can tilt the scale in your choice of business entity from corporation to proprietor or vice versa. You may have to put pencil to paper here. Also, the children will get older each year, and thus you have to again look at the choice-of-entity scale as that happens. What about the Kiddie Tax? The kiddie tax does not apply to earned income. It applies to unearned income. How Young Can the Child Be? Tax law has no minimum age. The IRS approved the hiring of a seven-year-old in its acquiescence to the Eller case. Mr. and Mrs. Eller owned and operated mobile home parks. They hired their three children, who were 7, 11, and 12 years old. In its acquiescence, the IRS noted the following: · Compensation is deductible only if it is reasonable in amount, actually paid, and based on services actually rendered. The fact that payments are made to minor children by their parents does not preclude deducting the payments. The acquiescence in this case means that the IRS accepts the holding of the court and that the IRS will follow the court’s decision in disposing of cases with the same controlling facts. It does not indicate approval or disapproval of the reasons assigned by the court for its conclusions. For you, this means that you need proof that the amount you are paying your child is a reasonable amount for the services actually rendered. Child Labor Laws Parents employing their children are mostly exempt from the labor laws. The Fair Labor Standards Act provides that youth younger than 16 years of age working in a business solely owned by their parents or by persons standing in place of their parents can work at any time of day and for any number of hours. But parents are prohibited from employing their child in manufacturing or mining or in occupations that involve the following activities declared hazardous by the Department of Labor: · · · · · · · · · · · · · · · Manufacturing and storing of explosives Driving a motor vehicle and being an outside helper on a motor vehicle (other than the delivery of newspapers to consumers where youth are exempt from the labor laws15) Logging and sawmilling Working with power-driven woodworking machines Being exposed to radioactive substances Working with a power-driven hoisting apparatus Working with power-driven metal-forming, punching, and shearing machines Meatpacking or meat processing (including the use of power-driven meat-slicing machines) Working with power-driven bakery machines Working with power-driven paper product machines, including scrap-paper balers and paper-box compactors Manufacturing brick, tile, and related products Working with power-driven circular saws, band saws, and guillotine shears Wrecking, demolition, and ship-breaking operations Roofing operations and all work on or about a roof Excavation operations If want to employ your child in one of the above hazardous occupations, check the exemptions that might apply, by going to http://www.dol.gov/elaws/esa/flsa/cl/exemptions.asp. Count on Extra Scrutiny The courts note that wage and salary payments from a father or mother to one or more of his or her children require careful scrutiny. It’s a family relationship. The court needs to take a close look to make sure there is both · a bona fide employer-employee relationship, and · a performance of services for the business. Planning tip. Make sure that you pay a reasonable wage based on a time sheet submitted in a timely manner. Forget Food and Lodging In the right circumstances, it is possible to build tax deductions for food and lodging furnished to an employee. That’s not going to happen with your minor-age children, because as the parent you are legally liable for support and maintenance of your minor-age children. Build Audit-Proof Support 1. Get an employer ID. When you become an employer, you need an employer ID number. You can apply for your employer ID number online, by fax, or by snail mail (no telephone applications for United States applicants). When you apply online, the IRS will assign a number immediately. · To apply online, click this link: https://www.irs.gov/businesses/small-businesses-selfemployed/apply-for-an-employer-identification-number-ein-online. To apply by fax or snail mail, see the instructions at this link: https://www.irs.gov/businesses/smallbusinesses-self-employed/how-to-apply-for-an-ein. · You may not apply for an EIN by telephone if you are a United States applicant. 2. Require a time sheet. The handwritten time sheet is excellent proof. Your child should complete the time sheet daily and turn it in weekly. We have a time sheet that you can use. To get the time sheet, click either PDF or Excel format. You should have your child complete a time sheet to help prove that he or she did the work. Vernon E. Martens hired his two sons and two daughters, but he lost about 80 percent of the payroll deductions he claimed for hiring his four children, because he did not require time sheets. 3. Document the pay scale. If you are paying your child minimum wage, you don’t have to worry about documentation of the pay rate. But you probably want to pay at a higher rate. This requires proof that the rate you are paying is a reasonable rate for this employment. Let’s say you used to pay a website developer $75 an hour to set up your web pages. Let’s say your son can do this work, but it takes him about twice as long to get the work in place. You have to think that an hourly rate of less than $37.50 is reasonable for the son. The key here is documentation of how you arrived at your reasonable rate of pay. 4. Pay with a W-2 payroll check. Always pay wages by W-2 payroll check. The W-2 wage is what exempts the under-age-18 child working for a parent from payroll taxes. Also, you need to establish a clear audit trail from your business checkbook to your child’s bank account. Remember, when you pay your child, this is now your child’s money. If you use a payroll service, make sure to explain to the service that your child is exempt from payroll taxes, and then make sure to check the payroll. Often, payroll services mistakenly take out FICA and Medicare on the child when they should not. (Note: In a few states, the state does not exempt the parent’s proprietorship or partnership business from unemployment taxes on the child.) 5. Complete the federal and state payroll forms. Your federal paperwork includes the forms below. To obtain one of the forms, enter this address in your browser or click this link: http://www.irs.gov/app/picklist/list/formsInstructions.html. · IRS Form W-4. Your employee-child uses this form to tell you, the employer-parent, how many exemptions and allowances he or she claims and whether he or she is exempt from withholding taxes. IRS Form W-2. If you paid your child more than $600 in wages, you must provide your child with a copy of IRS Form W-2. You also must file IRS Form W-3 and copies of the W-2s with the Social Security Administration. IRS Form 941. You report withholding, FICA, and Medicare on this form. Remember, wages paid by the mother or father to the child are exempt from FICA and Medicare. That’s nice, but even when no taxes are due, this form is due. Your dealings with the IRS are easiest if you file each quarter, even if you are eligible for seasonal filing. The IRS computers like to see Form 941 every quarter. IRS Form 940. The wages you pay your under-age-21 child are exempt from unemployment taxes. Even so, you must file IRS Form 940. If your child is your only employee, you enter the amounts paid to your child as both (1) gross pay and (2) exempt pay, making a net payment of zero subject to federal unemployment tax. Do the Paperwork or End Up Like This Lawyer Mom Failing to take the documentation steps can blow up on a parent. Lisa Fisher learned this the hard way. Lisa practiced law as a sole proprietor and sometimes brought her three children (all under age nine) into her office. The kids usually worked at the office two or three days a week for about two hours each day. They shredded confidential and other paper, sent out mail, answered phones, and performed other services connected to their mom’s law practice. Lisa claimed deductions in the three years before the court of $10,435, $10,313, and $8,022 for the wages she paid to her children. The IRS disallowed the deductions, and Lisa, lawyer that she was, took her case to court.20 Bad call on her part—not only did Lisa lose out on the wage deductions, but she also got dinged with negligence penalties. Lisa made three big mistakes that cost her the claimed deductions: 1. She didn’t issue her children W-2 forms. 2. She didn’t keep payroll records of any payments to her children. 3. She didn’t have any documentary evidence (for example, canceled checks for payments to the children, time sheets showing hours worked, or the rate of pay per hour). Without such evidence, the court came up with its own amount for the deductions—a meager $250 for each child for each year. Not quite the generous deductions Lisa had hoped for. Worse, she ended up on the hook for penalties because her resulting understatement of taxes exceeded $5,000 for each year. Even if the understatement was less, the court said, she had to pay the penalties because her failure to keep adequate books and records related to the kids’ pay was negligent. Takeaways If your children do not pay income taxes as you read this, they are excellent candidates as employees for your business regardless of business form: 1. The children pay zero taxes on earnings up to the $6,350 standard deduction amount. 2. They can use the traditional IRA to avoid taxes on $5,500, giving them a total of $11,850 on which they can avoid taxes. 3. They can use the 10 percent tax bracket, standard deduction, and traditional IRA so as to pay ittybitty taxes on earnings up to $21,175. To get this right, you need to pay the child on a W-2, have the child keep a time sheet, and create proof of a reasonable wage. The IRS has approved employing children as young as seven years old. If the children working for a parent are under age 18, both the children and the parent or parents are exempt from payroll taxes. In these cases, the parent operates a Schedule C business or both parents are the sole owners of a partnership. Corporations are not parents. They do not qualify for this exemption from payroll taxes. Even so, corporate hires of the owner’s children usually produce good tax benefits. All business owners can achieve tax benefits by hiring their children, regardless of the type of business entity. But parents who are Schedule C owners or in spousal partnerships achieve more benefit because neither they nor their under-age-18 children are subject to payroll taxes. Please call us if you have any questions. 2016 Tax Extension Deadlines are approaching. Go to www.tenfortyplus.com and complete your online organizer (under forms and documents). Make your appointment using our online appointment system. Call 281-397-7777 and get a user id with password set up so you can send us all your information through our online secure portal and do your taxes from the comfort of your home or office or come see us at our office. 1040 + Quality Tax Preparation & Financial Services Joseph C Becker EA www.tenfortyplus.com 281-397-7777, Fax 281-397-7443 joeb@tenfortyplus.com Contact Us There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves summarizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following: • Pension or IRA distributions. • Retirement. • Significant change in income or • Notice from IRS or other deductions. Revenue department. • Job change. • Divorce or separation. • Marriage. • Self-employment. • Attainment of age 59½ or 70½. • Charitable contributions • Sale or purchase of a business property in excess of $5,000. •

0% Capital gains

Ten Forty + Quality Tax Preparation & Financial Services 281-397-7777 Fax 281-397-7443 Tax Tips Could you benefit from the 0% capital gains rate? Most investors face a 15 percent tax rate on long-term capital gains. This increases to 20 percent for people at the top of the ordinary income bracket (39.6 percent). That's not too bad, considering the higher tax rates on regular income. But did you know that long-term capital rates are reduced to 0 percent in certain situations? This means you might be able to benefit from a reduced tax rate on your profits on the sales of assets. How to qualify for 0% capital gains rate Capital gains from transactions such as securities sales are taxed at ordinary income rates under a graduated rate structure. This structure ranges from 10 to 39.6 percent. However, if you've owned assets like securities for longer than a year, the maximum tax rate on a gain is 15 to 20 percent if you're at the top of the ordinary income tax bracket. Capital gains may be offset by capital losses and vice versa, so this rule applies to your net gains. On the other hand, short-term capital gains from sales of securities held a year or less are still taxed at ordinary income rates. If your capital gains fall within the parameters of the 10 to 15 percent ordinary income brackets — the two lowest brackets — the maximum tax rate on a long-term gain is 0 percent. This often benefits low-income investors (ex. young investors), but it can also favor adults during a year when their other income is low. Here's an example of how it could work: you file jointly and an S corporation loss reduces your taxable income to $65,900 this year. The upper dollar threshold for the 15 percent tax bracket for joint filers is $75,900. So, if you realize a $10,000 long-term capital gain in 2017, the entire gain is taxed at the 0 percent rate. Keep this helpful tax break in mind when planning year-end securities transactions. The 0 percent tax rate might just help you hold on to more of your profits. Give us a call if you have questions about your year-end planning. Please call us if you have any questions. 2016 Tax Extension Deadlines are approaching. Go to www.tenfortyplus.com and complete your online organizer (under forms and documents). Make your appointment using our online appointment system. Call 281-397-7777 and get a user id with password set up so you can send us all your information through our online secure portal and do your taxes from the comfort of your home or office or come see us at our office. 1040 + Quality Tax Preparation & Financial Services Joseph C Becker EA www.tenfortyplus.com 281-397-7777, Fax 281-397-7443 joeb@tenfortyplus.com Contact Us There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves summarizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following: • Pension or IRA distributions. • Retirement. • Significant change in income or • Notice from IRS or other deductions. Revenue department. • Job change. • Divorce or separation. • Marriage. • Self-employment. • Attainment of age 59½ or 70½. • Charitable contributions • Sale or purchase of a business property in excess of $5,000. • Sale or purchase of a residence or

IRS GIVES HURRICANE HARVEY VICTIMS TAX EXTENSION

Ten Forty + Quality Tax Preparation & Financial Services 281-397-7777 Fax 281-397-7443 Tax Tips Hurricane Harvey From IRS WASHINGTON –– Hurricane Harvey victims in parts of Texas have until Jan. 31, 2018, to file certain individual and business tax returns and make certain tax payments, the Internal Revenue Service announced today. This includes an additional filing extension for taxpayers with valid extensions that run out on Oct. 16, and businesses with extensions that run out on Sept. 15. "This has been a devastating storm, and the IRS will move quickly to provide tax relief to hurricane victims," said IRS Commissioner John Koskinen. "The IRS will continue to closely monitor the storm's aftermath, and we anticipate providing additional relief for other affected areas in the near future." The IRS is now offering this expanded relief to any area designated by the Federal Emergency Management Agency (FEMA), as qualifying for individual assistance. Currently, 18 counties are eligible, but taxpayers in localities added later to the disaster area will automatically receive the same filing and payment relief. The tax relief postpones various tax filing and payment deadlines that occurred starting on Aug. 23, 2017. As a result, affected individuals and businesses will have until Jan. 31, 2018, to file returns and pay any taxes that were originally due during this period. This includes the Sept. 15, 2017 and Jan. 16, 2018 deadlines for making quarterly estimated tax payments. For individual tax filers, it also includes 2016 income tax returns that received a tax-filing extension until Oct. 16, 2017. The IRS noted, however, that because tax payments related to these 2016 returns were originally due on April 18, 2017, those payments are not eligible for this relief. A variety of business tax deadlines are also affected including the Oct. 31 deadline for quarterly payroll and excise tax returns. In addition, the IRS is waiving late-deposit penalties for federal payroll and excise tax deposits normally due on or after Aug. 23 and before Sept. 7, if the deposits are made by Sept. 7, 2017. Details on available relief can be found on the disaster relief page on IRS.gov. The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Thus, taxpayers need not contact the IRS to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated. In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization. Individuals and businesses who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2017 return normally filed next year), or the return for the prior year (2016). See Publication 547 for details. Currently, the following Texas counties are eligible for relief: Aransas, Bee, Brazoria, Calhoun, Chambers, Fort Bend, Galveston, Goliad, Harris, Jackson, Kleberg, Liberty, Matagorda, Nueces, Refugio, San Patricio, Victoria and Wharton. The tax relief is part of a coordinated federal response to the damage caused by severe storms and flooding and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov. For information on government-wide efforts related to Hurricane Harvey, please visit: https://www.usa.gov/hurricane-harvey. Please call us if you have any questions. 2016 Tax Extension Deadlines are approaching. Go to www.tenfortyplus.com and complete your online organizer (under forms and documents). Make your appointment using our online appointment system. Call 281-397-7777 and get a user id with password set up so you can send us all your information through our online secure portal and do your taxes from the comfort of your home or office or come see us at our office. 1040 + Quality Tax Preparation & Financial Services Joseph C Becker EA www.tenfortyplus.com 281-397-7777, Fax 281-397-7443 joeb@tenfortyplus.com Contact Us There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves summarizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following: • Pension or IRA distributions. • Retirement. • Significant change in income or • Notice from IRS or other deductions. Revenue department. • Job change. • Divorce or separation. • Marriage. • Self-employment. • Attainment of age 59½ or 70½. • Charitable contributions • Sale or purchase of a business property in excess of $5,000. • Sale or p