Between hurricanes, health care and tax reform, too many of my recent blogs have felt at best confusing and at worst depressing. Granted, as someone who works in taxes I am used to not always being a bearer of good news, but this has felt excessive. So today I am going to try to turn the tide a bit and speak of one of the positive times in which I do get to be involved.

One of those happy times comes when someone gets to adopt a child, for I then get to bring the news that it comes with a tax credit. Granted, this is a very small piece when weighed against the importance of the whole situation, but it is one of those instances where if the tax help exists, you should take advantage of it.

Unfortunately, and not surprisingly, this credit isn’t simple, and complicated enough that I could not hope to explain every bit of it in depth in this small amount of space. So to introduce it, I will let the IRS speak for itself. It states that, “tax benefits for adoption include both a tax credit for qualified adoption expenses paid to adopt an eligible child and an exclusion from income for employer-provided adoption assistance. The credit is nonrefundable, which means it's limited to your tax liability for the year. However, any credit in excess of your tax liability may be carried forward for up to five years. The maximum amount (dollar limit) for 2016 is $13,460 per child.”

And if any of that doesn’t make sense to you, well it’s the IRS so that’s not surprising, and I promise we will work through it if you are in a situation to utilize it.

I did, however, want to spend some time going through what qualified expenses are for this credit, because how much money one can spend before an adoption is finalized can be quite large. So first of all, these include all reasonable and necessary fees paid for the adoption itself, as well as court costs and attorney fees incurred during the process. Beyond that, though, traveling expenses during the experience count, and this includes food and lodging while away from home.

Another key point is that these expenses count even before an eligible child has been identified. This means that what one pays at the outset of adoption efforts, such as home studies, are qualified expenses. Also, as another point of definition, an eligible child is an individual under the age of 18, or a person incapable of self-care.

There are some limitations, though. First of all, there is a income limit based on your modified adjusted gross income. So it is possible to have enough income that this credit is eliminated. Also, qualified expenses do not include expenses one pays to adopt the child of a taxpayer’s spouse.

Regardless, this credit still applies to a great number of adoptions. It’s a little extra financial bright spot following the brighter spot of an actual adoption. So if you are someone who is eligible for this, please contact us, for we would love the chance to further help celebrate those positive times. It feels like we all could use it. 

Now that wildfires have been added to the list of disasters for which some tax relief measures have been granted, our ability to feel safe keeps being chipped away at. As these situations come at us with alarming regularity, they have caused many stories and tips (including from me) to be put out there in the hopes of helping people prepare for such events. What if it’s already too late, though?

It is that situation that prompted the IRS to release some tips for those who need to reconstruct records after a disaster. I think they’re worth mentioning here, for not only is it good advice and guidance for those who are in the unfortunate situation of needing to immediately heed it, but it also gives some ideas on how you might want to handle recordkeeping to try to mitigate the pain, hassle, and heartache that disaster may cause.

For overall, the more organized you were beforehand (while hopefully seeing the need to keep those organized records in more than one place), the easier it will to put things together afterward.

But if you need to still create a list of lost inventory, contacting suppliers for past invoices can help you start to document goods that you purchased. This won’t necessarily allow you to arrive at any final numbers, but will provide a baseline of information to work with.

Those numbers can work hand in hand with income, too, some of which can be found from old tax documentation. This includes federal, state, and local returns, but if you’re a business, don’t stop there,, for you should also be able to acquire sales tax reports and payroll tax documentation.

All this can start to give you numbers, but one could be most interested in trying to document the loss of property. Much of that may not be recorded in any of the above documents, especially for types of property that you have had for years, and frankly, those can often be some of the more valuable pieces you own.

The best thing to do in that situation is have photos or videos of the property. It is good practice to keep such evidence for insurance documentation, but even if you did not take that step in a proscribed and clinical way, the IRS offers the interesting idea of checking your mobile phone and other cameras for anything that could have been captured on photos or videos that you have there.

Barring that, though, business owners should still sketch out the interior and exterior of their locations, nothing where equipment and inventory was located. For the outside of buildings, note as many things as possible as landmarks, include parking areas, and include anything damaged in the incident.

These are just small tips, but at least they offer some guidance for those who could be in situations where they feel helpless. To keep yourself from becoming helpless in the future, though, think of those steps you could take now to ease the pain of future disasters. There’s no way to make such things easy, but simple steps will feel much bigger when you’re in a situation that makes you glad they were taken.

Now that the shock of what Hurricanes Harvey and Irma did to our country has begun to fade, it can be too easy for those unaffected to go on with their lives without paying any more attention to those directly affected. So first let this be a slight push to not completely forget about those who are still battling, and if your situation has changed since the storms struck and you can now afford to give help, please do.  And those are only the disasters I mentioned in this space previously, for we also should not forget those in Puerto Rico still trying to rebuild after Maria’s wrath.

What all this tells us is that the impact of huge storms like these does not end when the storms move out. Returning to normal cannot be done with the flick of a wand when your house may no longer be a suitable or safe dwelling. And although I wrote earlier of some of the special tax rules being put in effect for those in disaster areas, I want to also note that many of those people can also take advantage of the casualty loss tax deduction.

This was not included as one of the special measures being undertaken by the IRS, for it is something always in place. It may be one of the deductions not always known about, however, for many rely on their insurance to reimburse them for any damage, destruction, or property loss occurring from unexpected events. And it is true that this this deduction does not cover things for which you were reimbursed by insurance. What about when insurance does not cover everything, though? Well at that point, at least you can have some of that hurt mitigated with tax help.

To cover the very basics of this rule, casualty losses occur from “sudden, unexpected, or unusual” events. This means that anything not occurring through normal wear and tear or progressive deterioration could possibly be reported as a loss on your taxes. Think of it this way, if you need a new roof because it’s been a number of years since it was replaced, that does not count, but if you need a new roof because a tornado damaged your home, then it does count.

When this happens to your personal property, the amount of your casualty loss is the lesser of the adjusted basis of your property or the decrease in fair market value of your property as the result of the casualty.

Now at this point the insurance reimbursement comes into play, for you must adjust the casualty loss by the amount of that reimbursement, but if you can document that you still had a loss following that, then it can still be reported as an itemized deduction.

And as a side note, the same general rules apply to any losses you may have from theft.

Such losses are generally deductible in the year that they occur, so you don’t want to sit on making claims and getting everything in order when it comes to these events. There are also some rules around the deduction that make it not the easiest deduction to navigate, but as always, please be sure to reach out to us if you need any assistance doing so. 

In the last week, the ideas behind President Trump’s tax reform plan finally started to become known. And it is natural for everyone to read the details and think about how it will affect their situation. No matter what answer you came up with, though, don’t start thinking that it means anything definite. Just remember the back-and-forth battle with health care that has occurred since Trump took office as an example of how difficult turning thought into action can be.

And since that is still so much up in the air, there is no reason for me to delve into the nuts and bolts of what is being proposed. Just know that we will remain on top of it so that you can trust your tax returns are in capable hands when any changes come.

I do, however, want to talk about the idea of how what is being proposed is being framed in terms of making taxes easier to understand and the tax code less complicated. But when so many pieces are involved, isn’t it bound to be a little complicated? Taxes are a huge way that a giant country of hundreds of millions of people is funded. And politics aside, most of those people want the government to have some level of power, and with that comes a cost. There will never be an end to the debate of how much power should be used and in what areas, but it will end up being expensive no matter what.

And because of that, there is no way this will end with a system that is simple enough that everyone can take care of their taxes on the back of an envelope. That’s a dream that will take bigger changes than simply how a tax bill is calculated.

Taxes are difficult, and no one wants to really think about how much we pay for them. It feels like money that we rightfully earned is being taken from us. But remember that they do go to fund many things that mostly everyone wants the government to do, so it’s not that bad.

At the same time, though, everyone should feel entitled to use the tax system – however the government determines it stands at the time- to their greatest advantage and keep the most money that you can in your own pocket. It’s legal and been determined you deserve it after all, right? So because of that, and because this system is going to be complicated no matter what, it’s good to have a professional by your side.

It is impossible to ignore the proliferation of do-it-yourself tax products that are out there now. Do you really want to teach yourself how to handle things that can be this difficult, though? No one wants a fly-by-night heart surgeon, because he works with a complicated system. Now your tax return may not be as immediately dire, but it should still be placed in capable hands.

So remember our hands are here for you, today, and through whatever the future holds. 

We are now officially into fall, even if many of us already left summer mode behind once Labor Day passed. For most, this means a little more buckling down at work before the holiday season comes and gives us a new excuse to take some extra time off work. It also means we are exiting the high time of the year for weddings.

And sure, these are beautiful occasions when people declare their love for one another in front of the people who mean something in their lives … but it also comes with some financial and tax considerations, and that’s where I come in. Maybe that’s why I am not invited to too many weddings, but this semi-killjoy attitude still comes with information that the recently married should know. Even those who are not yet married may want to pay attention, for when it comes to tax purposes, even if you do not get married until December 31, you are considered married for the year when it comes to tax purposes.

First, marriage often comes with a change in name, and it is important to report this change to the Social Security Administration. The name on your tax return must match what is on record with the SSA. And sure, dealing with a Social Security comes with a level of joy that may only be rivaled by a trip to the DMV, but it is worth it to not run into issues come tax time. Along the same lines, if you have changed your address, send the IRS a change of address form, too.

Next, married couples will face a decision on whether they want to file their tax returns jointly or separately.  Filing jointly is usually the better way to go, but everyone’s situation is different, so it is worth looking into to make sure you are selecting the most beneficial status. 

Once you figure out how you will file, it is a good idea to run some rough calculations and get an estimate for how much tax you will owe by the end of the year. Once you know that number, it could be worth considering changing your withholding. If your new combined income means will owe a little more, you can start having that withheld from your paycheck and not face a big bill early next year. If your new situation means you can expect a bigger refund, though, changing your withholding can allow you to bring home more money each week in your paycheck, and that is usually a welcome thing with that aforementioned holiday season coming up.

Finally, when you look up issues concerning marriage, the IRS includes their near-constant reminder to watch out for scams. There are legitimate things to think about when it comes to your finances when newly married, and there are legitimate people who can help you with that. If someone contacts you claiming that your new status comes with some new payments you have to make, though, that is  less legitimate. Remember to follow your gut instinct if something sounds fishy, and do not hesitate to investigate it.

After all, it’s that gut instinct that led you to the marrying your partner in the first place, no? Those guts can know some things.

A few weeks ago I wrote about the importance of recordkeeping and how it eases a lot of the burden and frustration come tax time. I addressed it as more of an issue with one’s personal taxes, though. This time, however, although I wish I didn’t have to say it, I have also seen all too many cases when businesses were much too lax with the records they keep. This can present an even bigger problem than with one’s personal records, for if you cannot document business expenses, you are potentially losing legitimate deductions on your taxes and costing yourself money.

So in this vein, I first want to state that keeping bank and credit card statements is not enough. Sure, this proves that you spent some money, but does not prove what you spent it on or why you needed it. Now this doesn’t mean throw away your statements, though, for they are key in a three-pronged approach for the documentation you want to keep to legitimize your expenses.

You see, those statements may not prove what you spent money on, but they do prove that money was spent on something. This is still key to prove that you paid the money and aren’t trying to pass off something a friend or family member paid for (or making something up completely) as an expense you paid for.

Beyond that, though, you need to keep the receipts you receive when you spent that money. That will show what the money actually went to.  Don’t just stuff them in your pocket, though, and forget about them for six months, for you will want to be able to remember why the money was spent. This may not be so difficult if you’re, let’s say, a contractor who bought some supplies at Home Depot; those will not be too difficult to track back to the job you were working on at the time. But if you are at a lunch meeting with a business associate, exactly who you were with and what you were discussing is not going to be so evident from the receipt itself. Just jotting down some notes to that effect on that receipt when you get it can help this issue.

The third piece of documentation you will want to hold onto are any invoices you receive. With that, you can further justify some of the money that came out and is shown on those bank statements, and show exactly what it paid for. If you are able to have all three of these pieces of documentation for one expense, it gives you all the necessary backup to prove that you spent what you said you spent and what you spent it on.

Even with that, though, this does not automatically make a business expense. Please remember that just because you have a business does not mean that every expense you ever have is for your business. The groceries for your family still are just groceries for your family. This is the reason that I always recommend having a separate business banking account, as it can automatically help alleviate the confusion between what is or is not a business expense.

Finally, I know that none of this is fun; it is the part of running a business that is a drain and feels like you are not doing the things that you wanted to do when you started the enterprise. You want to make sure that that enterprise is running at peak ability, though, and part of that is keeping control of your records.

I almost cannot believe that I am writing about such things again after just discussing some of the ramifications of Hurricane Harvey last week. Since then, though, Hurricane Irma arrived to carve its own path of destruction.

I do not want to go into the same levels of discussion that I did last week, but just let it be known that my heart continues to hurt for those who have been affected, but still sends out good hopes and well wishes for those whose lives have been affected.

I do want to say, though, that much like with Hurricane Harvey, the IRS is offering similar help to those newly affected, and have set up a website, located here, with all the pertinent information. Please pass that along to anyone you know who could benefit from having that knowledge.

In the midst of all these unfortunate events, though, we continue to see stories about those who do what they can to help others in need. Combine that with our remembrances of 9/11 this week, and we can be a little heartened by what we can endure, and what others will do to help us in that quest.

And since I have to tie this into something financial or tax-related in some way, I will take a little time now to give a reminder that what makes for a charitable tax deduction is not simply monetary donations, but can include expenses incurred while working for a charity.

So first off, remember that all of these deductions to be valid must involve a qualified charity. Granted, most of them are, but it never hurts to check, especially when starting a relationship with a new group, and ensure that the organization is legitimate. It is important to note that for a charitable contribution to be deductible, it must be made to such a group as an entity, and not earmarked to be set aside for a specific person or family.

Second, if you do substantial charity work for such a group and travel for it, many of those expenses can be deducted if you have not already been reimbursed for them. One thing many do not realize is that this can even include working with local organizations. If you use your car at a time for the express purpose of helping that charity, then you can even use a standard mileage rate in claiming a deduction. This will probably be easier than keeping track of exact expenses, but you will still want to keep a reliable record of this type of travel as you go, noting your mileage.

And of course, this can include longer and farther trips, too. A slight warning here, though, that the trip must involve a genuine and substantial duty to the charity and cannot be deducted if a significant portion of it was for recreation or vacation. If a trip does qualify, though, then such as expenses as air, rail and bus transportation, lodging costs, meals and certain transportation costs while at your destination become deductible.

It is a wonderful thing that there are people who give so much of themselves and their time to such noble pursuits, and it is also wonderful that they get these little bonuses for the good work that they