Goldman Kurland and Mohidin, LLP

Tax Bites: 4/1/2014 Can I claim my elderly parent as a dependent? For you to deduct up to $3,900 on your 2013 tax return under the adult-dependent exemption, in most cases the parent must have less gross income for the tax year than the exemption amount. Generally Social Security is excluded, but payments from dividends, interest and retirement plans are included.... In addition, you must have contributed more than 50% of your parent’s financial support. If the parent lived with you, the amount of support you claim under the 50% test can include the fair market rental value of part of your residence. If you shared caregiving duties with a sibling and your combined support exceeded 50%, the exemption can be claimed even though no one individually provided more than 50%. However, only one of you can claim the exemption. The adult-dependent exemption is just one tax break that you may be able to employ to ease the financial burden of caring for an elderly parent. Contact us for more information on qualifying for this break or others.

Tax Bites: 3/25/2014 It’s not too late to make a 2013 contribution to an IRA Tax-advantaged retirement plans allow your money to grow tax-deferred or, in the case of Roth accounts, tax-free. But annual contributions are limited by tax law, and any unused limit can’t be carried forward to make larger contributions in future years. So it’s a good idea to use up as much of your annual limits as possible.... Have you maxed out your 2013 limits? While it’s too late to add to your 2013 401(k) contributions, there’s still time to make 2013 IRA contributions. The deadline is April 15, 2014. The limit for total contributions to all IRAs generally is $5,500 ($6,500 if you were age 50 or older on Dec. 31, 2013). A traditional IRA contribution also might provide some savings on your 2013 tax bill. If you and your spouse don’t participate in an employer-sponsored plan such as a 401(k) or you do but your income doesn’t exceed certain limits your traditional IRA contribution is fully deductible on your 2013 tax return. If you don’t qualify for a deductible traditional IRA contribution, consider making a Roth IRA or nondeductible traditional IRA contribution. We can help you determine what makes sense for you.

Tax Bites: 3/18/2014 Your 2013 return may be your last chance for 2 depreciation-related breaks If you purchased qualifying assets by Dec. 31, 2013, you may be able to take advantage of these depreciation-related breaks on your 2013 tax return:... 1. Bonus depreciation. This additional first-year depreciation allowance is, generally, 50%. Among the assets that qualify are new tangible property with a recovery period of 20 years or less and off-the-shelf computer software. With only a few exceptions, bonus depreciation isn’t available for assets purchased after Dec. 31, 2013. 2. Enhanced Section 179 expensing. This election allows a 100% deduction for the cost of acquiring qualified assets including both new and used assets up to $500,000, but this limit is phased out dollar for dollar if purchases exceed $2 million for the year. For assets purchased in 2014, the expensing and purchase limits have dropped to $25,000 and $200,000, respectively. Even though this may be your last chance to take full advantage of these breaks, keep in mind that the larger 2013 deductions may not necessarily prove beneficial over the long term. Taking these deductions now means forgoing deductions that could otherwise be taken later, over a period of years under normal depreciation schedules. In some situations, future deductions could be more valuable, such as if you move into a higher marginal tax bracket. Let us know if you have questions about the depreciation strategy that’s best for your business.

Tax Bites: 3/11/14 2013 higher education breaks may save your family taxes Tax credits can be especially valuable because they reduce taxes dollar-for-dollar; deductions reduce only the amount of income that’s taxed. A couple of credits are available for higher education expenses:... 1. The American Opportunity credit up to $2,500 per year per student for qualifying expenses for the first four years of postsecondary education. 2. The Lifetime Learning credit up to $2,000 per tax return for postsecondary education expenses, even beyond the first four years. But income-based phaseouts apply to these credits. If your income is too high to qualify, you might be eligible to deduct up to $4,000 of qualified higher education tuition and fees. The deduction is limited to $2,000 for taxpayers with incomes exceeding certain limits and is unavailable to taxpayers with higher incomes. If you don’t qualify for breaks for your child’s higher education expenses because your income is too high, your child might. Many additional rules and limits apply to the credits and deduction, however. To learn which breaks your family might be eligible for on your 2013 tax returns and which will provide the greatest tax savings please contact us.

Tax Bites: 2/25/2014 Could deducting state and local sales taxes save you more? For the last several years, taxpayers have been allowed to take an itemized deduction for state and local sales taxes in lieu of state and local income taxes. Although this break hasn’t yet been extended to 2014, it is available for 2013.... It can be valuable if you reside in a state with no or low income taxes or if you purchase major items, such as a car or boat. So see if you can save more by deducting sales tax on your 2013 return. And if you’re contemplating a major purchase, keep an eye on Congress to see if the break will be revived for 2014. You may want to factor the deduction’s availability into your purchase decision. For help determining whether deducting sales tax makes sense for you and for the latest information on the status of the deduction for 2014 please contact us