News & Articles

Financial Scrapbooking Event - April 23, 2018

Posted on Thu, Apr 12, 2018

In conjunction with the National Financial Literacy Month, Vanessa Birman, CPA will be giving a one hour presentation titled "Financial Scrapbooking" on April 23, 2018. This event will be held at 6:30pm at the Caledonia Branch of the Kent District Library. The presentation will highlight the importance of creating a scrapbook for essential financial records such as insurance policies, retirement accounts and investments, as well as give insight on how to organize your information. A financial scrapbook is not only beneficial for financial planning, but also for emergencies and end-of-life arrangements. Creating this valuable tool enables all information to be stored in one location.

The presentation will be held at 6:30pm on April 23, 2018 at the Caledonia Branch of the Kent District Library, located at 6260 92nd Street SE, Caledonia, MI 49316.

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Tags: Documentation, Event, EHTC, Financial

The Employer's Role in Documenting Workers

Posted on Tue, Oct 04, 2016
The employer's role in documenting alien employees is a balancing act. Under the Immigration Reform and Control Act (IRCA) you must verify through examination of certain documents that your employees are authorized to work in the United States. At the same time, you must avoid unfair employment practices.
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Tags: Smart Hiring, Hiring Process, Documentation, New Employee

How to Set Up an IRS-Approved Family Loan

Posted on Sun, Sep 07, 2014

Today's low-interest-rate environment makes it easy to loan money to family members on favorable terms with full IRS approval. Here's a rundown of what the law covers and why now might be a good time to set up loans.

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Tags: EHTC Article, Documentation, IRS, Interest Rate, AFR, Newsletter, Articles, Family Loans, Families

Documentation is Key to Car and Truck Expenses

Posted on Sat, Jul 12, 2014

When it comes to vehicle expense tax deductions (and costs related to other "listed" property), as well as travel and entertainment expenses, the law is clear and strict on required documentation. And, there is almost little wiggle room.

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Tags: EHTC Article, Business, Documentation, Vehicle Expense, Newsletter, Articles, Listed Property

How a Deductible Home Office Affects a Sale

Posted on Sun, Jun 29, 2014

If you use part of your home as an office and take deductions for related expenses on your annual tax return, can you claim a valuable federal tax break when you sell? Specifically, can you claim the home sale gain exclusion of up to $250,000 for single taxpayers ($500,000 for married couples filing jointly)? In many cases, you can still take advantage of this tax benefit.

Gain Exclusion Qualification Rules

    If you're single, you can potentially sell your principal residence for a gain of up to $250,000 without owing federal tax. If you're a married joint filer, you can potentially pocket up to $500,000 without paying federal tax. To qualify, you generally must pass these tests:
You must have owned the property for at least two years during the five-year period ending on the sale date (referred to as the ownership test).
    2. You must have used the property as a principal residence for at least two years during the same five-year period (referred to as the use test).
    To be eligible for the $500,000 joint-filer exclusion, at least one spouse must pass the ownership test, and both spouses must pass the use test.
    If you excluded a gain from an earlier principal residence sale, you generally must wait at least two years before taking advantage again. For joint filers, the $500,000 exclusion is only available when both spouses haven't claimed an exclusion for an earlier sale within two years of the sale date.
    Gain beyond what you can exclude under these rules is generally treated as a long-term capital gain taxed at a maximum federal rate of no more than 20 percent. However, gain caused by depreciation deductions on the part of your home used as a deductible office may be taxed at up to 25 percent.

What Can You Deduct?

If you qualify to take home office deductions, you can deduct part of expenses including mortgage interest, depreciation, utilities, insurance, and repairs. The office must be used regularly and exclusively as your business place, which means personal activities cannot be done there. Other tips:

  • Take photos to prove the room was used for business purposes in case of an IRS audit.
  • To figure the percentage of your home used for business, you can use two methods -- square footage or the number of rooms.
  • Home office deductions can't exceed your income from the related business activity. But if they're greater, you can carry the excess deductions forward to a future year.
  • If a home office is required by an employer, it's a good idea to get a written statement from the company explaining the requirement.

As long as your deductible home office space is in the same dwelling unit as your residence, you can use the gain exclusion to shelter profit from the entire property.

In other words, you are not required to split the sale into two separate deals for tax purposes (one transaction for the sale of the residential part of your property and another for the sale of the office part).

However, you will be taxed on gain up to the amount of depreciation deductions on the office part of your property that were claimed for business use after May 6, 1997. You will owe a maximum federal rate of 25 percent on this profit (called unrecaptured Section 1250 gain).

However, paying tax on this portion of your profit is not really so bad, considering that you collected earlier tax savings from the office part of your property.

A Separate Dwelling

The tax outcome is less favorable when the office is not in the same dwelling unit as the residence.

For example, say you claimed home office deductions for what was formerly a carriage house, garage, or finished basement with cooking and bathroom facilities and a separate entrance. In these cases, even though the office is on the same property or in the same building, it is considered to be a separate dwelling unit that is not part of the residential portion of your property.

In these scenarios, you must pass the ownership and use tests (see right-hand box) for both the office portion of your property and the residential part in order to treat the sale as a single transaction that is eligible for the gain exclusion.

If you fail the tests for the office part (for example, because it was used as a deductible office for the entire five-year period ending on the sale date), you must calculate separate gains for the office and residential portions of your property. Then, you can use the gain exclusion only to shelter profit from the residential part. Any gain on the office part is usually fully taxable.

You will generally owe a federal income tax rate of no more than 25 percent on gain up to the amount of post-May 6, 1997 depreciation. Any remaining profit from selling the office part of your property will be taxed at the regular capital gains rates.

Contact your tax adviser if you are contemplating the sale of property with a home office. Advance planning may be necessary to maximize your tax savings.


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Tags: EHTC Article, Tax Laws, Documentation, Home Office, IRS, Articles, Tax Deduction

Summer Travel: Tips for Saving Money and Possibly Taxes

Posted on Fri, Jun 20, 2014

Are you planning a vacation this summer? Two-thirds of Americans have at least one leisure trip planned this summer, according to a recent poll by Harris Interactive, a Nielson Company. That's 2 percentage points higher than last year's poll and 6 points higher than 2012. AAA expects 2014 to be the busiest travel season since 2000, thanks to economic improvement and pent-up demand.

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Tags: EHTC Article, Business Travel, Business, Documentation, IRS, Travel Expenses, Travel, Articles

Deductions for Temporary Out-of-Town Work Assignments

Posted on Wed, Jun 11, 2014


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Tags: EHTC Article, Business, Documentation, Deductions, Travel Expenses, Per Diem, Articles

Don't Take Chances on Gambling

Posted on Fri, May 30, 2014

At the slots or online, remember to keep records.  Gambling at the casino or the racetrack can be entertaining for many people. If you're one of them, you should obviously risk only what you can afford to lose from a personal financial planning perspective. But from the IRS perspective, you need to be aware of the tax consequences.

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Tags: EHTC Article, Internal Revenue Code, Gambling, Documentation, Records Retention, IRC, Individual Income Tax, IRS, Articles, Maintain Records, Gambling WInnings