DiSabatino CPA Blog

Mike DiSabatino CPA

A blog by Michael DiSabatino CPA with topics on Tax Savings, Business, Management and more...
Mike DiSabatino

Mike DiSabatino

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Mike is the founder of the firm of Michael DiSabatino, CPA.  He produces this blog to keep his clients and friends informed of new tax laws, tax saving strategies, as well as, business tips. 


If you have a question or comment for Mike, please use our Contact Form to reach out for us.

Mike DiSabatino

Making Sense of the Individual Tax Calendar

Weekly Tips
What are the Federal Holidays?

 

Keeping all the filing dates straight when it comes to the tax calendar can be a challenge in the best of times. Add some unique Federal Holidays and you often have a mess on your hands. So what do you need to know?

Federal Holidays

The Federal Tax Calendar contains some fairly predicable holidays and one or two that can throw you for a loop. Here are the current observed holidays for federal tax purposes in 2012:

• Jan 2: New Years Day
• Jan 16: Martin Luther King Jr.
• Feb. 20: Washington's Birthday (President's Day)
• April 16: D.C. Emancipation Day
• May 28: Memorial Day
• July 4: Independence Day
• Sept 3: Labor Day
• Oct. 8: Columbus Day
• Nov. 12: Veterans' Day (observed)
• Nov. 22: Thanksgiving Day
• Dec. 25: Christmas Day

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Mike DiSabatino

Deductions Don't Lose Your Adoption Credit

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Finalize your adoption in 2012...or else

Those who have gone through or are going through the adoption process know only too well how long it takes and how expensive the process is. According to the 2011 Adoptive Family Survey, adoptions can range in cost from $7,000 to over $50,000!

And, unless Congress acts to change the current tax law, the $12,650 adoption credit available in 2012 will no longer be available beginning in 2013. Here is what you need to know:

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Mike DiSabatino

Phased Out Phase-outs Making a Comeback?

Weekly Tips

Preparing for the 2013 ''automatic'' tax law rollback

The fuse is lit and it continues to burn with a potential "explosion" in tax law changes at the end of 2012.  If you wait until the end of the year to plan for these changes it may be too late.  Over the course of 2012 a number of tax tips will be provided to help become aware of the possible changes.

Itemized deductions and personal exemptions are common benefits within the tax code that reduce your taxable income.  Prior to 2010, there were provisions to phase-out these tax reduction benefits for those whose income surpassed certain thresholds.  After 2012, unless Congress acts, your itemized deductions and personal exemptions may once again be phased-out. 

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Mike DiSabatino

Where's My Refund?

Weekly Tips

 

With the tax filing due date behind us, those who have not yet received their refund might want to know when it will be processed. If this applies to you, there is a way to check on the status of your refund online. The popular “Where’s My Refund” feature on the IRS web site (www.irs.gov) allows taxpayers to see the status of their refund after filing their income tax return.

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Mike DiSabatino

Getting Married? These Tips are for You!

Weekly Tips

 

If you recently got married, plan to get married, or know someone who is taking the matrimonial plunge, here are some important tax tips every new bride and groom should know.

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Mike DiSabatino

2012 Medical Expense Alert

Weekly Tips

 

When the Health Care Reform Act was signed into law it included a number of tax provisions that go into place over the next few years. One of the biggest changes will impact taxpayers who have medical expenses that can be itemized on their tax return.

Old Law

In order to reduce your taxes by itemizing medical related expenses your qualified medical expenses need to exceed 7.5% of your Adjusted Gross Income (AGI). To the extent your expenses exceed this limit you may reduce your taxable income dollar for dollar. Medical expenses are fairly diverse and include doctor, dentist, chiropractor, prescription drugs, and hospital stays.

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Mike DiSabatino

The Earned Income Tax Credit (EITC)

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Are you Eligible?

Since 1975, the Earned Income Tax Credit (EITC) has provided a tax break to millions of Americans each year. The credit was originally established to give low and medium income taxpayers a break on their Social Security taxes while providing an incentive to work. The EITC is often the subject of missed opportunity as the IRS estimates as many as 20% of taxpayers that qualify for the credit do not include it on their tax return. Here are some things to consider:

Q. Do I have to have children to qualify? Do I have to be married?

A. No. One of the most common errors is thinking the EITC is only for married couples with children. Both single and married taxpayers can qualify for the EITC. Even taxpayers without children may qualify for the credit if they meet certain age and residency requirements. You may NOT, however, file your tax return as "married filing separate" and still receive the credit.

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Mike DiSabatino

What Not to Do When Doing Your Taxes

Weekly Tips

Common Tax Blunders

Taxpayers may benefit from plenty of qualifying credits and deductions when filling out tax returns – as long as they operate within the rules. But for those trying to bend the facts to make things more favorable, they may open the door to tax evasion charges, fines and possible time in prison.

It is true that honest mistakes do happen and it can be challenging to keep up with changing tax laws. Just keep in mind that the IRS can be reasonable when issuing tax oversight penalties, but expect intentional attempts to skip paying taxes to be dealt with much more severely.

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Mike DiSabatino

Rejected!

Weekly Tips
What to do if your e-filed tax return is rejected by the IRS

 

With nearly 70% of individual tax returns now being filed electronically, many of us take the filing method as a matter of course. And in most instances it is. However, when an e-filed tax return is rejected filing can become more complicated and more important.

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Mike DiSabatino

Better Bartering Basics

Weekly Tips

 

The IRS is clear on their point of view.  If you barter you must include the barter activity's fair market value as income on your tax return in the year the barter activity is performed.  But is it really that simple?  Here are some things to consider if you barter.

What is fair market value? The classic definition is the price someone is willing to pay and someone is willing to receive for the exchange of goods or services.  But we all know this requires a level of judgement.  What if an item is on sale when the barter activity is performed?  Are prices always the same for a similar item or service?  Prior to establishing the value of a barter item, shop around and take the lowest defendable value possible for your bartered item.

Example: You barter dog grooming for accounting work.  If you offer a range of prices from $20 to $60 for your grooming service and a dog owner can readily get the same service done for $15 somewhere else…what is the fair market value? If you can reasonably substantiate the $15, this lower amount could become your fair market value.

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Mike DiSabatino

Safe Harbor for California Use Tax

Weekly Tips

For the last few years we had a reminder in our tax organizers about paying your share of California's sales tax on out-of-state purchases - or better known as Use Tax.  There is a updated (read, BETTER) news about this subject.... read on...

 

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Mike DiSabatino

Better Bartering Basics

Weekly Tips

 

The IRS is clear on their point of view.  If you barter you must include the barter activity's fair market value as income on your tax return in the year the barter activity is performed.  But is it really that simple?  Here are some things to consider if you barter.

What is fair market value? The classic definition is the price someone is willing to pay and someone is willing to receive for the exchange of goods or services.  But we all know this requires a level of judgement.  What if an item is on sale when the barter activity is performed?  Are prices always the same for a similar item or service?  Prior to establishing the value of a barter item, shop around and take the lowest defendable value possible for your bartered item.

Example: You barter dog grooming for accounting work.  If you offer a range of prices from $20 to $60 for your grooming service and a dog owner can readily get the same service done for $15 somewhere else…what is the fair market value? If you can reasonably substantiate the $15, this lower amount could become your fair market value.

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Mike DiSabatino

There's Still Time to Fund Your IRA

Weekly Tips

 

Remember you have until you file your tax return to make a contribution to a Traditional IRA or Roth IRA for the 2011 tax year.  The annual contribution amount is $5,000 or $6,000 (if you are age 50 or over).  Prior to making the contribution, if you (or your spouse) are an active participant in an employer's qualified retirement plan, you will want to make sure your modified adjusted gross income (MAGI) does not exceed certain income thresholds.  There are also MAGI (income) limits to qualify to make Roth IRA contributions.

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Mike DiSabatino

Using an IRS withdrawal to Pay for Education

Weekly Tips

In response to a questions as to when you can avoid early withdrawal penalty on an IRA for Higher Education:

Beginning January 1, 1998, a taxpayer may make withdrawals from an individual retirement account (IRA) to pay the qualified higher education expenses for the taxpayer, the taxpayer's spouse, or the child or grandchild of the taxpayer or taxpayer's spouse at an eligible educational institution. The taxpayer will owe federal income tax on the amount withdrawn, but will not be subject to the 10 percent early withdrawal tax that applies when amounts are withdrawn from an individual retirement account before the account holder reaches age 59-1/2.

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Mike DiSabatino

Found Money!

Weekly Tips

Congress extends payroll tax cut

In an anticipated move, Congress has approved an extension of the 2% Social Security payroll tax cut through 2012.   The provision was set to expire at the end of February, but now wage earners and self-employed households will see this tax saving throughout the year.  So what should you do with the estimated average $1,000 tax savings per household in 2012?

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Mike DiSabatino

Income the IRS Can't Touch

Weekly Tips

Wouldn't it be nice to have a source of nontaxable income?  You may be more fortunate than you realize. Listed here are a number of income items that the IRS does not tax.

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Mike DiSabatino

Where's My Tax Return?

Weekly Tips

Common items that are often forgotten

Wondering why your tax return is not finished? Often the delay can come from one or two items that were overlooked and are needed to complete your tax return. Here are some of the most common:

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Mike DiSabatino

How to Provide Your QuickBooks file to Your CPA

Weekly Tips

It is tax time again, and we often ask our clients to send us a copy of their QuickBooks file.  Some don't know how to accomplish this.  As a QuickBooks Pro Advisor, we thought we might share some steps to help.

There are 2 ways to effectlively transfer the QuickBooks (QB) data

  1. Mail a back up *.qbb file if your tax preparer needs to view and modify your entries.

  2. Mail a Portable File *.qbm file for the smallest file size results - better for emailing.

Here are the steps for each method - some version may vary slightly... if you have questions, don't hesitate to call us:

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Mike DiSabatino

IRS Eliminates Homebuyer Credit Notices

Weekly Tips
Don't forget your payment

The IRS recently announced that it will no longer send you a reminder to repay your First-Time Homebuyer Credit. However there is now an on-line tool to keep you up to date on the status of your repayment.

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Should I Pay My Tax Bill With a Credit Card?

Weekly Tips

 

Your tax bill is now due and you may be considering paying the bill with your credit card. Is this a good idea? How does it work?

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