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Oh My…The Eve Of The New Year!

December 31, 2013

Another year has gone by with so may tax law changes and filing updates…. but let’s not talk about tax stuff quite yet… Let’s talk about Gunwel Associates Inc. and what is new at the office. First and foremost our office has moved to beautiful Louisville Kentucky. We are located on the East End of Louisville, very close to the famous Papa Johns pizza headquarters and home to the even more famous Louisville Cardinals.louisville-cardinals-mascot

Such a great town with interesting factoids…like:

  • The City of Louisville was founded in 1778 by George Rogers Clark and is named after King Louis XVI of France.
  •  Zachary Taylor (1784-1850), 12th President of the U.S., grew up in Louisville and is buried in Zachary Taylor National Cemetery on Brownsboro Road.
  • The Louisville Slugger baseball bat was made by Andrew “Bud” Hillerich in his father’s woodworking shop in Louisville in 1884. The brand name “Louisville Slugger” was first used in 1893.
  • “Happy Birthday to You” was written by sisters Mildred and Patty Hill in their Louisville kindergarten class. Originally called “Good Morning to You,” it was later changed to this tradition birthday anthem.
  • Muhammad Ali, world recognized Louisvillian and Kentucky’s Athlete of the Century, was a three-time heavyweight boxing champion.
  • The Ohio River stretches 981 miles and is one of the major rivers of North America.
  • The Old Louisville neighborhood near downtown is the largest Victorian neighborhood in America.
  • The Cheeseburger originated at Kaelin’s Restaurant on Newburg Road. In 1934, Margaret Kaelin’s husband asked her to put a slice of American cheese on his hamburger and the legend was born.
  • Jennie Carter Benedict, a Louisville restaurateur, created Benedictine, a spread made of cucumbers and cream cheese.

As always Gunwel is available to discuss any and all of your financial (and tax) needs, so don’t hesitate to contact us either by calling us at 502-290-2065 or visit our website at www.gunwel.com and email us through our link.

The IRS, in what some consider a proactive move, announced in October that there would be a delay of approximately one to two weeks to the start of the 2014 filing season. While delays to the start of tax season are becoming routine, the reason given this time isn’t late legislation but rather the 16-day government shutdown that occurred in October. According to the IRS, additional time is needed to allow adequate time to program and test tax processing systems. So filing season officially begins January 28th…but no worries as Gunwel can still see you sooner and you can get in line for your refunds.

Have a safe and fun New Years Eve and we look forward to seeing you in 2014 to help you with all of your tax and financials needs.

I Know What It’s Like….

February 8, 2013

I got a call today from a friend of mine who works in collections at a company here in Nashville that handles only collection accounts for a nearby hospital. He hates his job. He makes $10.00 an hour and use to get commissions until they decided to pool all the accounts, hire more collectors and now nobody gets anything but their hourly wage. When he complained, his boss said “get another job.” Today he made 220 collection calls and most of them were wrong numbers as he only spoke to 20 people. He’s been at this job for three months after being let go from another job simply because he made $1.00 more than anyone else in the accounting department at which he worked. He worked there two years and out of the 80 people who worked in that warehouse, he was the only one that said to the owner I want to grow with this company. He’s frustrated, he’s sad and his rent is going up. He’s half my age and doesn’t know what to do.

I hired this gal at my last job that was 57 years old. I was hiring for an accounts receivable position and was interviewing many unqualified folks. The job paid $9.00 an hour. She was an ex-CPA from another state and because of her age she could not get a job. She said she has been on many interviews but they look at her like she won’t last. She said to me “I need a job, and I’m willing to work for this amount of money.” I hired her on the spot. She was an excellent employee, did great work and sadly, for me, she quit several months later after she landed a job paying her $35.00 an hour. I was very happy for her.

In 2009 I sold my tax practice (of 24 years) in San Francisco and moved to NYC where I opened Gunwel Associates (which came to Nashville with me when I moved here). I was too young to retire and honestly after Uncle Sam get’s half there is not a lot left. LOL Unfortunately, months prior to the sale my ,then, partner and I owned a home in San Francisco that had a loan that matured after two years and the game plan was to sell or refinance as the loan amount was to double. There was no way we could pay that mortgage and put the house up for sale. It was a great house that in any other time would have sold within a few days. But the market crashed and the house sat. We ended up selling the house as a short sale. It was devastating to me. Here I was this big financial guy that was facing the same problems that so many other people in America were going through. It was a very sad period in my life. I was ashamed, embarrassed and I wanted to tell the world I know what it’s like. But I didn’t as I felt I would lose credibility with clients and my business may take a hit.

Why do I tell you these stories today. Because I want you to know why Gunwel Associates is different from other tax and bookkeeping firms. We know what it is like to have financial upsets. We can relate to you in all aspects of your financial life. When a tax accountant has empathy and compassion you can rest assured that you will be listened to, heard and advised in a way that is healing and helpful. I know what it is like to raise children and worry about putting food on the table. I know what it is like to live pay check to pay check. I know what it is like to choose which bill to pay…the hosipital bill where your 2nd child was born or your rent. I know what it is like to lose your house. I know what it is like to sell your stuff to make ends meet. I know what it is like to worry. But I also know what it is like to survive; to pull yourself up and become successful. All you have to do is breath and hang on. I had always been searching for my purpose in life ever since I was a young man ( don’t feel sad for me as I’m still young, just in my early fifties…HA) and I realized that sharing my experiences and business knowledge was my purpose…having empathy and compassion is my purpose. Someone told me recently that “hanging on” can be a purpose in itself. To everyone out there in this very scary and unstable economic world…hang on. If you need financial help come to Gunwel. If you need your taxes or books done, come to Gunwel. And if you need a place to come to say “I feel lousy about my finances etc” you can come to Gunwel…as I know what it’s like. Give us a call at 615-730-9444 or visit our website at www.gunwel.com. I am here to help!

 

Common Tax-Filing Mistakes You Can Make…

February 7, 2013

Since I’ve been a tax guy for about 25 years and owner of Gunwel Associates Inc “Nashville’s Complete Tax & Bookkeeping Firm” I’ve never been a fan of do it yourself tax software. I’ve seen too many mistake. Even though tax preparation software helps you make fewer mistakes on your returns…just one slip in entering information on your computer could end up costing you, either in the form of a larger tax bill or a smaller refund. And even if a mistake — either on your computer or paper forms — doesn’t cost you cash, it could delay the receipt of any refund you’re expecting. To get exactly what you should from the Internal Revenue Service, as quickly as possible, look for these tax-filing pitfalls. A few are new, thanks to recent law changes. Others are perennial problems taxpayers face each filing season. With little care, you can avoid them all.

  • Pay your Roth conversion taxes. A lot of taxpayers have taken advantage of the tax law change than now allows anyone, regardless of income, to convert a traditional individual retirement account to a Roth IRA. But if you made such a change in 2010 when this conversion was first allowed, you have a tax task to take care of on your 2012 return. A special provision allowed individual who moved their money into a Roth IRS in 2010 to spread the taxes due on converted amounts equally over the 2011 and 2012 tax years. The first half of those conversion taxes was due with your 2011 tax return. Make sure you pay the rest of the taxes with your 2012 return.
  • Homebuyer tax credit complications. Since its creation, the first-time homebuyer credit went through significant changes. It started as a $7,500 interest-free loan from Uncle Sam, changed into a true credit of up to $8,000 for a first-time buyer and added a $6,500 tax credit for a previous homeowner moving up to another house. All the revisions to eligible buyer guidelines, purchase time frames, income thresholds, home price restrictions and payback requirements are a tax-filing minefield. If you’re not careful, a mistake here could end up costing you the credit or at least slowing down the processing of your return. If you’re paying back the original $7,500 tax credit, the IRS has made the repayment process a bit simpler by eliminating in many cases the requirement that taxpayers file Form 5405. Now some individuals who are repaying the credit can just write the repayment amount they are including with their taxes directly on Form 1040.
  • Math miscalculations. The most common error on tax returns, year after year, is bad math. Mistakes in arithmetic or in transferring figures from one schedule to another will get you an immediate correction notice. Math mistakes also can reduce your tax refund or result in you owing more tax than you thought. When IRS examiners find a discrepancy, they’ll definitely let you know and, in many cases, will correct your mistake and re-figure your taxes for you. Don’t give them the chance. Make sure your math entries are right.
  • Direct deposit dangers. Taxpayers can have a refund directly deposited into multiple bank accounts. This option is a great way to save your refund money, but the more numbers you enter on a tax form, the more chances you have to enter them incorrectly. And a wrong account or routing number could cause you to lose your refund entirely. You can divide your refund into thee accounts by filing Form 8888 along with your individual return. It’s not a difficult document to complete, but if you put in wrong account numbers, your refund could end up in someone else’s account or be sent back to the IRS. Either way, you might not be able to retrieve your refund because there is no IRS procedure for replacing lost electronically transferred funds. Incorrect account numbers aren’t just a problem when a refund is split multiple ways. Even if your refund is going to just one account, make sure you enter your account and bank routing numbers correctly.
  • Complete charitable contributions. Did you give to charitable groups last year? All types of donations, from cash to cars, could be valuable tax deductions, so make sure you count them all when you file. Be sure to follow the donation tax rules, the most important being that you give to a qualified organization — that is, one that has tax-exempt status with the IRS, Also be careful when calculating any gifts of clothing and household items. Tax law now requires that these donations be in good or better condition or the deduction is disallowed.

Lots of things can go wrong when filing your taxes and that is why I like to say come you us at Gunwel Associates. Our job is not to make mistakes and file your return with complete accuracy. We’ve been great at doing so for many years. Let us know if you need any help as that is why we are here. Give us a call today at 615-730-9444 and visit our website at www.gunwel.com. You work hard for your money, let us work smart to help you keep it. See you soon!

Craigslist ads: looking for donor eggs paying $5500 ??!!??

February 6, 2013

We’ve all seen the ads on Craigslist that say something like “Have you had Hep A & B, we’ll pay you $500.00 for a one dy study” or “Nashville women 21-29, earn $5000+ through egg donation.” And maybe one or more of us have tried to get a little extra cash by participating in these study’s. Usually in these hard economic times we try to do everything possible to make ends meet. The Tax Court (that’s the IRS) recently came out and said that medical study income is taxable to the participant. Which is unlike what you had thought when you participated… Here is the case that the Tax Court ruled on:

In 2008, Covance Clinical Research Unit, Inc. advertised to find participants for a gout study. taxpayer X has suffered from gout since 1983, and since the study was being held near his home, he decided to sign up. The study required the taxpayer to be confined to the research facility for ten days and nine nights, where he had to follow a strict schedule of blood tests, urine tests, EKG, and vital screenings. Covance provided meals and lodging at the facility during the study and also required follow-up out-patient visits.

Covance paid the taxpayer $5,500 for his participation in the study. Despite receiving a 1099-Misc from Covance, the taxpayer excluded the amount from his income. Upon audit, the taxpayer was unable to produce the contract between himself and Covance. An attempt to report the income on an amended return during audit failed, and the case ended up in Tax Court. In Court, the taxpayer claimed the amount was either excluded under section 104 as compensation for physical injury or sickness, or the amount was a gift under section 102. Once again, the taxpayer failed to produce the contract. The Court looked at both exclusions offered under the code. First, under section 104, the Court found no evidence that the taxpayer suffered any injuries during the study. The gout was not brought on by the study itself and the taxpayer did not claim that Covance caused him harm. Next, under section 102, gifts are defined as “proceeds from a detached and disinterested generosity out of affection, respect, admiration, charity or like impulses.” The fact that Covance issued the taxpayer a 1099-MISC shows that the payment was not intended to be a gift.

Section 61(a) is clear that gross income includes all income from whatever source derived unless otherwise excluded by the Internal Revenue Code. Taxpayers bear the burden of proof that an amount of income is excludible. The Tax Court held the payment to be taxable income.

The lesson here is that we need to remember that nothing is free in life. And like most of our Dads use to say “nothing is for sure except death and taxes.” At Gunwel Associates we are here to help you with all of your tax needs. It is tax time and we are ready to prepare and efile your tax returns. We are open Monday through Saturday 8am- 8pm and Sundays by appointment. You work hard for you money, let us work smart to help you keep it. Give us a call at 615-730-9444 and visit our website at www.gunwel.com. See you soon!

Update on filing your taxes

January 10, 2013

Every year clients contact us and ask how quickly can we get our return filed. Generally it is because they want their refund money or need their returns for viewing by a mortgage company. This year due to the tax drama in Washington they have extended the efiling start date to the end of the month. Here is an article that explains in better detail.

IRS Plans Jan. 30 Tax Season Opening For 1040 Filers

WASHINGTON – Following the January tax law changes made by Congress under the American Taxpayer Relief Act (ATRA), the Internal Revenue Service announced today it plans to open the 2013 filing season and begin processing individual income tax returns on Jan. 30.

The IRS will begin accepting tax returns on that date after updating forms and completing programming and testing of its processing systems. This will reflect the bulk of the late tax law changes enacted Jan. 2. The announcement means that the vast majority of tax filers — more than 120 million households — should be able to start filing tax returns starting Jan 30.

The IRS estimates that remaining households will be able to start filing in late February or into March because of the need for more extensive form and processing systems changes. This group includes people claiming residential energy credits, depreciation of property or general business credits. Most of those in this group file more complex tax returns and typically file closer to the April 15 deadline or obtain an extension.

“We have worked hard to open tax season as soon as possible,” IRS Acting Commissioner Steven T. Miller said. “This date ensures we have the time we need to update and test our processing systems.”

The IRS will not process paper tax returns before the anticipated Jan. 30 opening date. There is no advantage to filing on paper before the opening date, and taxpayers will receive their tax refunds much faster by using e-file with direct deposit.

“The best option for taxpayers is to file electronically,” Miller said.

The opening of the filing season follows passage by Congress of an extensive set of tax changes in ATRA on Jan. 1, 2013, with many affecting tax returns for 2012. While the IRS worked to anticipate the late tax law changes as much as possible, the final law required that the IRS update forms and instructions as well as make critical processing system adjustments before it can begin accepting tax returns.

The IRS originally planned to open electronic filing this year on Jan. 22; more than 80 percent of taxpayers filed electronically last year.

Who Can File Starting Jan. 30?

The IRS anticipates that the vast majority of all taxpayers can file starting Jan. 30, regardless of whether they file electronically or on paper. The IRS will be able to accept tax returns affected by the late Alternative Minimum Tax (AMT) patch as well as the three major “extender” provisions for people claiming the state and local sales tax deduction, higher education tuition and fees deduction and educator expenses deduction.

Who Can’t File Until Later?

There are several forms affected by the late legislation that require more extensive programming and testing of IRS systems. The IRS hopes to begin accepting tax returns including these tax forms between late February and into March; a specific date will be announced in the near future.

The key forms that require more extensive programming changes include Form 5695 (Residential Energy Credits), Form 4562 (Depreciation and Amortization) and Form 3800 (General Business Credit). A full listing of the forms that won’t be accepted until later is available on IRS.gov.

As part of this effort, the IRS will be working closely with the tax software industry and tax professional community to minimize delays and ensure as smooth a tax season as possible under the circumstances

This, of course, should not keep you from coming on in and preparing your taxes as the minute the IRS says go so are we. Give us a call today if you have any questions or concerns at 615-730-9444 and visit our website today at www.gunwel.com. See you soon!

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Tax Strategies for 2012

December 17, 2012

As the end of 2012 draws near, now is the time to review any tax law changes. Gunwel Associates Inc encourages all of our clients to call us with any tax questions and we always like to do tax reviews so there are no surprises.

The Bush-era tax cuts which provide for tax brackets of 10, 15,25, 28, 33 and 35% apply for 2012. Now that the November election is over, the House and Senate will once again debate extending the Bush-era tax cuts beyond 2012 and address other various extenders. Without extension of the current rates, the tax brackets for 2013 will be 15, 28, 31, 36 and 39.6%. With that in mind, this blog will examine some tax planning strategies that could reduce your tax bill for tax year 2012, assuming no drastic new legislation is passed retroactive to the beginning of 2012. Deferring income and accelerating tax deductions obviously reduces the current year’s tax liability, but with income tax rates set to increase in 2013, you may actually want to accelerate income into 2013 and defer deductions to a future year if you will be in a higher tax bracket. Each taxpayer’s situation is different, but here are some items to consider.

  • Capital Gain Rates: The Tax Relief Act of 2010 extended the 0% and 15% capital gains rates through 2012. In 2013, these rates will increase to 10% and 20% with rates reduced to 8% and 18% for aggregate capital gains from property held for more than 5 years. For taxpayers in the 10% or 15% ordinary income tax bracket in 2012, there exists an opportunity to recognize long-term capital gains taxed at 0%. Only to the extent that a long-term capital gain causes you to exceed the upper threshold of the 15% ordinary income tax bracket are long-term capital gains taxed at 15%. Taxpayers who will not enter into the 25% tax bracket should consider selling long-term capital assets to avoid being taxed on these gains. Selling assets on installment provides some flexibility to deal with the possibility that the 0/15% favorable capital gains rates might be extended. Even if an asset is sold on installment, you can elect out of installment reporting by reporting the entire gain on your tax return for the year of sale. If the favorable capital gain rates are not extended, you would more likely to elect the entire gain from a 2012 installment sale in 2012. Alternatively, if Congress extends the favorable capital gain rates, you could still report the sale using the installment method and spread the gain over the life of the contract.
  • Qualified Dividends: Qualified dividends receive special tax treatment like long-term capital gains, and the Tax Relief Act extended the 0% and 15% rates for qualified dividends through 2012. Beginning in 2013, all dividends are taxed at ordinary income tax rates, potentially up to 39.6%. For taxpayers owning U.S. corporations or qualified foreign corporations, there is a strong incentive to pay dividends before the end of the year in order to take advantage of the current low capital gains rates.
  • Medicare Surtax: Beginning in 2013, <1411> takes effect. This new Medicare surtax is imposed at the rate of 3.8% of the lesser of (1) net investment income, or (2) the excess of modified adjusted gross income (MAGI) over the threshold amount. MAGI for this purpose is AGI without the foreign earned income exclusion. The threshold amount is $250,000 for a joint return or surviving spouse, $125,000 for a married filing separate return and $200,000 for all others. You should consider accelerating investment income into 2012 or shifting assets for those who will not be subject to the tax in 2013 or later.
  • 0.9% Medicare Hospital Insurance Tax: Beginning in 2013, an additional 0.9% Medicare hospital insurance (HI) tax will be imposed on an individual taxpayer’s wages (including self-employment income) received with respect to employment in excess of $250,000 for joint filers, $125,000 for married filing separately, and $200,000 for all others. The employer is required to withhold the additional 0.9% HI tax on an employee’s wages exceeding $200,000 for all others. Although there is really no way to avoid this tax short of earning less money, you should still be aware of this provision, especially if both spouses earn under $200,000 and their combined earned income exceeds $250,000. In that instance the employer will not be required to withhold for the additional tax, but it will be due with the tax return. To avoid underpayment penalty, you should increase your withholding or estimated tax payments.
  • 179 and Bonus Depreciation: For 2012, the maximum 179 deduction is $139,000 and the beginning phase-out level is $560,000. Bonus depreciation 50%. For 2013, the 179 limit is set to revert back to $25,000 with a beginning phase-out level of $200,000. Bonus depreciation will expire after 2012 without Congressional action.
  • Itemized deductions: Those of you who barely have enough itemized deductions to exceed the standard deductions may choose to pay two years’ worth of real estate taxes and possibly make an extra mortgage payment for the interest deduction in order to bundle your itemized deductions and create the greatest tax benefit. Others who annually itemize deductions may reduce your tax liability with some planning as well.

Those are a few strategies to think about with regards to your 2012 taxes. Gunwel is here is answer any questions or concern you may have re any and all of your financial matters. A lot can change when Congress meets, but be assured that Gunwel is on top of those changes. Give us a call at 615-730-9444 and visit our website at www.gunwel.com. You work hard for your money, let us work smart to help you keep it!

Geez…more travel tips?!?!

December 13, 2012

This is the time of year that I travel. Generally it is for two reasons…the timing of the holidays and I like to get away before tax season starts. When I was younger and my kids were still in school we would take trips over the Christmas holiday and they literally grew up as savvy travelers. So much so that Lace, my youngest daughter, has the travel bug and when she graduated from college she took a map of the US and threw a dart and where it landed is where she wanted to start her “after-college” life and career…but it had to be a coastal town, so she had quite a few dart throws…LOL

Conde Nast Traveler magazine came out with some cool tips that save both time and money. With all my travels I had not even known about a few of them. Maybe these can help during your holiday travels.

  • Fly on Tuesday, Wednesday, or Saturday. Traveling on off-peak days-and at off-peak times-means lower fares, a less crowded cabin, and a greater chance of snagging those elusive mileage-award seats. Taking two days off for a long weekend? Instead of a Thursday-Sunday or Friday-Monday trip, save money by flying on a Saturday and returning on a Tuesday.
  • Buy airline tickets midday on Tuesdays. When I purchase a domestic ticket, I usually do it on a Tuesday between noon and 3 p.m. Airlines tend to announce fare sales on Monday nights, and other airlines match those sales on Tuesday mornings, explains Rick Seaney, CEO of FareCompare.com, which means that by 3 p.m. on the East Coast and by noon Pacific time, the greatest number of sale tickets has hit the system.
  • Stay over Sunday. Many hotels get Friday and Saturday night bookings from leisure travelers and Monday-through-Friday traffic from business travelers, so there’s a void on Sunday night-which increases your chances of an upgrade. Instead of going for Friday and Saturday nights, book Saturday and Sunday or Sunday and Monday.
  • Carry credit cards that earn you elite status. Play your travel-rewards credit cards right and you’ll receive special rates and perks. Carry one airline-branded card and one hotel-branded card that help you attain and maintain elite status-and make sure that at least one of those cards charges no foreign-purchase fees (preferably a Visa or MasterCard, since those are more widely accepted overseas than American Express).
  • Book through “Top Producers.” The travel agent who sends the most travelers to a leading hotel or cruise line will be able to get you the most perks. These usually come in the form of resort credits, complimentary meals, and/or free upgrades. Ask an agent whether he is on any travel companies’ advisory boards.

It is funny to change our thought patterns on travel or our work/vacation schedule to anything but a calendar week. Usually when we take time off it is a Monday thru Friday, but works do allow your vacation to be a Tuesday through Monday (or any variation like that). Gunwel Associates Inc is sort of like a travel agent as we will accommodate any and all dates for appointments. (Great transition huh?)

This time of year is a great time to have your year-end tax check up or even just fax over your last paycheck stub to see how your tax liabilities may be looking. Give us a call at 615-730-9444 and visit our website at www.gunwel.com as we have loads of information for you. Remember, you work hard for your money, let Gunwel work smart to help you keep it! Happy travelling.