Keep Track of Miscellaneous Deductions

Miscellaneous deductions such as certain work-related expenses you paid for as an employee can reduce your tax bill, but you must itemize deductions when you file to claim these costs. If you usually claim the standard deduction, think about itemizing instead because you might be able to pay less tax. Here are some tax tips that may help you reduce your taxes:

Deductions Subject to the Limit. You can deduct most miscellaneous costs only if their sum is more than two percent of your adjusted gross income. These include expenses such as,

• Unreimbursed employee expenses.
• Job search costs for a new job in the same line of work.
• Some work clothes and uniforms.
• Tools for your job.
• Union dues.
• Work-related travel and transportation.
• The cost you paid to prepare your tax return. These fees include the cost you paid for tax preparation software. They also include any fee you paid for e-filing of your return.

Deductions Not Subject to the Limit. Some deductions are not subject to the two percent limit. They include:

• Certain casualty and theft losses. In most cases, this rule applies to damaged or stolen property you held for investment. This may include personal property such as works of art, stocks, and bonds.
• Gambling losses up to the total of your gambling winnings.
• Losses from Ponzi-type investment schemes.

You claim allowable miscellaneous deductions on Schedule A, Itemized Deductions, but keep in mind, however, that there are many expenses that you cannot deduct. For example, you can’t deduct personal living or family expenses.

Need more information about itemizing deductions or help setting up a system to track your itemized deductions? Don’t hesitate to call.

Early Retirement Plan Withdrawals and your Taxes

Taking money out early from your retirement plan may trigger an additional tax. Here are six things that you should know about early withdrawals from retirement plans:

1. An early withdrawal normally means taking money from your plan before you reach age 59 1/2.

2. If you made a withdrawal from a plan last year, you must report the amount you withdrew to the IRS. You may have to pay income tax as well as an additional 10 percent tax on the amount you withdrew.

3. The additional 10 percent tax does not apply to nontaxable withdrawals. Nontaxable withdrawals include withdrawals of your cost to participate in the plan. Your cost includes contributions that you paid tax on before you put them into the plan.

4. A rollover is a type of nontaxable withdrawal. Generally, a rollover is a distribution to you of cash or other assets from one retirement plan that you contribute to another retirement plan. You usually have 60 days to complete a rollover to make it tax-free.

5. There are many exceptions to the additional 10 percent tax such as using the money for qualified higher education expenses or unreimbursed medical expenses in excess of 10 percent of adjusted gross income. Some of the exceptions for retirement plans are different from the rules for IRAs.

6. If you make an early withdrawal, you may need to file Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, with your federal tax return.

The rules for retirement plans can be complex, but help is just a phone call away. Call now and make sure you file the right tax forms and get the tax benefits you’re entitled to.

LMGW Stays Active in the Community

On August 13, 2015, LMGW staff rolled up their sleeves and spent the day assisting hundreds of people who struggle to meet even the most basic necessities. Senior accountant Leah Burling coordinated the 2015 event, acting as liaison with community leaders on behalf of LMGW partners and staff.  LMGW’s nonprofit organization of choice this year was Sacred Heart Community Service of San Jose.

http://sacredheartcs.org/

Sacred Heart provides services for families in need, among them the homeless and elderly, single parent families and other impoverished individuals.

Sacred Heart has evolved into a respected and innovative provider of programs that assist families with achieving lifelong economic self-sufficiency. Today, it meets basic needs such as food, clothing, and housing assistance, while at the same time offering the tools for self-sufficiency, including employment assistance, family mentoring, and adult and youth education programs.

After meeting at the community center, our group was divided into three assignments manning the pantry, clothes closet and the donation center. LMGW staff packaged boxes of food donated from local food banks, and then handed these food items out to those seeking assistance. Those in the clothes closet folded and sorted clothes in preparation for delivery, and those at the donation center received and sorted donations into different categories.

The day was hard work, but everyone was able to see the value of the services that Sacred Heart provides.

The LMGW Family Continues To Grow

Managing Partner, Matt Wheeler and his wife Jenny welcomed their son Devin into the world on Wednesday, August 26^th at 12:55 AM. Devin weighed 6 lbs, 2 oz and was 19 inches long. Dad, Mom and sister, Samantha are all thrilled with the new addition. Welcome Devin! Perhaps a fourth-generation CPA?