Janell A. Israel & Associates
1585 Kapiolani Blvd., Suite 1604, Honolulu, Hawaii 96814 Phone: 808-942-8817
December 2015 Tax Newsletter
What's New in Taxes:
You Can Now Request An Identity-Theft Tax Return
In the past, if you were a victim of identity theft, the IRS would not send you a copy of the fraudulent tax return due to federal privacy laws. Now, under a recent change of policy, you can request certain redacted individual income tax returns that were fraudulently filed in your name. While some information will be blacked out on the released returns, you should be able to tell what personal information the thief was able to use.
To obtain a copy of the fraudulent return, you need to send a signed, written request to a special address (Internal Revenue Service, P.O. Box 9039, Andover, MA 01810-0939). Include your name and social security number, mailing address, and the tax year of the return or returns you're requesting. Be sure to state that you're the taxpayer and attach a copy of proof of your identity such as a driver's license. Additional paperwork is required if you choose to have your preparer or other authorized representative request the return for you.
You can request the current year's return as well as up to six years of prior returns. The IRS says you will receive acknowledgement of your request within 30 days and the copy of the fraudulent return (or follow-up correspondence) within 90 days.
Take Advantage Of Last-Minute Tax Savers
Year-end 2015 is approaching fast! You have only a very limited time to make tax-smart moves for 2015. Here are seven suggestions.
* If you believe you will owe state or local taxes, consider prepaying them before December 31 so you can claim the deduction in 2015. (Be aware of alternative minimum tax consequences.)
* Put necessary last-minute purchases on your credit card. Using a credit card lets you take a deduction when the purchase is made, not when the card balance is paid. You can use the credit card rule for both business and personal transactions.
* Are you a business owner in need of additional furniture, fixtures, equipment, and computers to operate your business? Consider making the purchases before the end of the year in order to qualify for the Section 179 expensing deduction.
* Stock losses can be used to offset stock gains. If you have unrealized losses for 2015, consider selling those positions to offset any gain transactions you might have made. You can also deduct up to $3,000 in net capital losses against other income. Net losses greater than $3,000 can be carried forward and used on your 2016 tax return.
* Consider making a deductible traditional IRA contribution. If you qualify, you can contribute up to $5,500 for 2015, plus an additional $1,000 "catch-up" contribution if you are age 50 or older. You have until mid-April 2016 to make your contribution and still take a deduction for 2015.
* Maximize your employer-offered tax-deferred retirement accounts, such as 401(k), 403(b), or 457 plans.
* Donate appreciated stock or mutual funds to charity. You receive a deduction for the appreciated value, but you don't have to report or pay taxes on any of the appreciation.
Call us for more tax-saving tips that you can fit in before December 31.
What's New in Finances:
Social Security Changes May Affect Your Financial Plan
The "Bipartisan Budget Act of 2015" that was signed into law on November 2, 2015, closed two "unintended loopholes" that you may have been considering as part of your retirement plan. These strategies, which include the restricted application for spousal benefits and voluntary suspension of benefits, will generally no longer be available.
The restricted application for spousal benefits is an option to apply for social security when you reach your full retirement age, but restrict your claim to your spousal benefit. This allows you to delay your own social security benefit. Under the Act, this option will only be available if you reach age 62 by December 31, 2015.
The voluntary suspension of benefits lets you file for benefits when you reach full retirement age, then suspend the benefits. With this strategy, you delay receiving your benefits until a later date when they would be higher, while allowing your spouse to currently collect a spousal benefit. Under the Act, this option will no longer be available after April 2016.
Give us a call if you think either of these changes will affect you. We can help you update your retirement plan.
Keep Debt From Spiraling Out Of Control
Is your debt load straining as the traditional season of giving stretches on? Some kinds of debt are considered "good," such as the mortgage on your home. Other kinds – not so much. Here are suggestions for managing your debt.
* Stop piling on. A mountain of debt will only continue to grow if you keep adding to it. Watch your spending and take a hard-line approach to new purchases.
* Get a clear picture of all your debts. Put the data in a spreadsheet or other easily accessible ledger. Your credit history report can get you started with a listing of your outstanding accounts.
* Create a payment calendar. Get familiar with due dates. Use your smartphone or other technology to provide reminders.
* Make payments on time. If you miss a due date or skip a payment, you'll get stuck with a late fee in addition to what you already owe. Don't make a bad situation worse.
* Give 'til it hurts. At the very least, pay the minimum amount required. If you can stand the pain of paying more, you'll save time and money over the long haul.
* Prioritize your debts. Does your credit card charge sky-high interest rates? Pay that balance down first by putting any additional amount you can afford toward the principal. Devise a system for identifying and paying the debts that cost the most.
* Set up an emergency fund. Although you'd like to use excess cash to pay off debt, you also need some "wiggle room." Stash away funds so you can avoid adding to your debt if an emergency occurs.
Without good oversight, debt can quickly spiral out of control, leaving you feeling powerless. Give us a call for more money management techniques that will work for you.
All information is believed to be from reliable sources, however we make no representation as to its completeness or accuracy. The information contained in this newsletter is provided by Mostad& Christensen, Inc. The information is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. For more information on anything in this newsletter, or for assistance with any of your tax, business, or financial strategy concerns, contact our office.
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Securities and advisory services offered through National Planning Corporation (NPC), Member FINRA/SIPC, a Registered Investment Adviser. Mosted& Christensen, Janell Israel & Associates and NPC are separate and unrelated companies. NPC does not provide tax or legal advice.
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