Your Advisor's Thoughts

There Ain't No Such Thing As A Free Lunch!!

This time of year we are all bombarded by tax preparation advertisements. From catchy Superbowl commercials to pesky internet ads, everyone seems anxious to prepare your tax return - and most of them seem to be offering to do so for FREE! Some companies promise a limited fee; others send you "free" tax software through the mail. Such offers are tempting! Tax season is a dreaded time for many, and the thought of letting someone else tackle your returns at no cost is certainly appealing.

Unfortunately, these offers are rarely what they seem.

In the last month, a number of clients have walked through our doors having explored one of these enticing offers and found the results less than satisfying! For example:

• At a local preparer offering "FREE" 1040EZ tax returns, the actual cost upon completion was over $300. Had this particular return been dropped off at YBI, it would have cost $99.
• Another preparer offering "FREE" returns charged $79; the YBI fee would have been $75.
• After promising "Returns for $74", still another company charged $115. This return would have cost $75 at YBI.

In addition to cost, consider what kind of support you will receive after tax season should the IRS contact you with questions about your return. At YBI, our tax pros are available year-round to address IRS questions and even provide assistance if necessary. Ongoing education ensures that they are current with the most recent tax law changes.

So when you are tempted by yet another "FREE" offer, remember:

"There Ain't No Such Thing As a Free Lunch"

Come see us at YBI for Expert Tax Advice, Fast Accurate Service, and our Convenient Drop-Off during office hours: Monday - Friday, 8:00 am - 5:00 pm, and Saturday, 9:00 am - 12:00 pm.

To contact "Your Best Interest" Financial Services, e-mail us at ybifs.@ybifs.com or call us at 610-485-1010.

Securities offered through Trustmont Financial Group (TFG) Inc. Member FINRA/SIPC Advisory services offered through Trustmont Advisory Group (TAG) Inc. 200 Brush Run Road, Greensburg, PA 15601 724-468-5665 Neither "Your Best Interest" Financial Services, Inc. nor 401kPRO are affiliated with TFG or TAG.

Important Information for PA Tax Filers

There is a new line on the 2011 PA tax return that must be completed by every PA resident. Line 25 reports Use Tax, which is the counterpart of Sales Tax and applies to taxable purchases made over the internet, through toll-free numbers, from mail order catalogs and from out-of-state locations where sales tax was not charged and collected by the seller. The use tax rate is the same as the PA sales tax rate; 6%. It is PA's attempt at mandatory compliance of remitting PA sales tax for untaxed out of state purchases that would be subject to sales tax if purchased in PA. Every PA resident is personally responsible for remitting the use tax directly to the PA Department of Revenue.

This isn't a new law;
it's enforcement of current law.

Examples of taxable items include the following: antiques, paintings, appliances, books, stationery, computers, exercise equipment, formal clothing, furniture, furnishings, jewelry, luggage, handbags, musical instruments, office equipment, souvenirs, televisions, radios, stereo equipment, video equipment and camera equipment. Examples of taxable services include lawn care, pest control, self-storage, building cleaning and maintenance services such as housekeeping services.

Purchases are reported in 2 categories; individual purchases less than $1000 and individual purchases over $1000. For individual purchases less than $1000 you have the option of providing detailed purchase information or using the optional use tax table provided by PA Department of Revenue to calculate your use tax liability based on taxable income. For individual purchases over $1000 you must provide detailed purchase information and itemize the purchases. Your use tax liability will be calculated on the taxable purchase amount.

If you paid some sales tax on items - for example sales tax paid at a lower rate paid to another state - you may offset your use tax liability by the sales tax already paid.

For detailed information on use tax reporting responsibilities and options, visit: www.revenue.state.pa.us/usetax.

To contact "Your Best Interest" Financial Services, please reply to this e-mail, or call us at 610-485-1010.

Securities offered through Trustmont Financial Group (TFG) Inc. Member FINRA/SIPC Advisory services offered through Trustmont Advisory Group (TAG) Inc. 200 Brush Run Road, Greensburg, PA 15601 724-468-5665 Neither "Your Best Interest" Financial Services, Inc. nor 401kPRO are affiliated with TFG or TAG.

Simplify Your Life!

As your "One-Stop Investment Shop", the "Your Best Interest" Financial Services team brings together investment, insurance, and tax expertise along with outstanding customer service to provide a comprehensive approach to your unique financial situation.

Unlike traditional financial services firms, we can simplify your life by addressing all the areas of your individual financial plan under one roof. Integrating investment knowledge with tax advice is a YBI distinctive. There are significant potential benefits to incorporating tax preparation services with:

Retirement Planning

Financial Planning

Investment Advice

401(k) Advice

Life Insurance

Income Planning

Real Estate

This year, take your financial planning a step further: let the YBI team help you build personalized investment strategies that have tax advantages as well. Come talk to us and see what we can do to simplify your life!

With warmest regards,

Phil Giambri

Founder and Owner, "Your Best Interest" Financial Services, Inc.

To contact "Your Best Interest" Financial Services, e-mail us at ybifs@ybifs.com, or call 610-485-1010.

Securities offered through Trustmont Financial Group (TFG) Inc. Member FINRA/SIPC Advisory services offered through Trustmont Advisory Group (TAG) Inc. 200 Brush Run Road, Greensburg, PA 15601 724-468-5665 Neither "Your Best Interest" Financial Services, Inc. nor 401kPRO are affiliated with TFG or TAG.

2011 Federal Energy Tax Credits

Tax season is quickly approaching! Have you made improvements to your home over the last year to improve its energy efficiency? Maybe you are considering home system upgrades and are wondering about the possible tax benefits. The Federal tax credits for making energy efficient improvements continue to be extended in 2011, but at lower levels than in previous years. For 2011 the credit varies depending on the type of improvement.

The improvements in this first list qualify for a tax credit of 10% of the cost of the improvement, up to $500 or a specific amount from $50 - $300. Remember that for these items, installation costs are not included.

• Insulation
• Roofs

- Metal roofs with appropriate pigmented coatings

- Asphalt roofs with appropriate cooling granules

- All must meet ENERGY STAR requirements

• Windows and doors

- Must be ENERGY STAR qualified

- Windows, maximum of $200

Each of the items in the next list qualify for the same tax credit (10% of the cost of the improvement, up to $500 or a specific amount from $50 - $300) but in these cases, installation costs can be included in the cost calculations:

• Furnaces & boilers

- Natural gas, propane, oil, hot water

- Capped at $150

- Must meet 95AFUE

• Advanced main air circulating fan

- Capped at $50

- Must use no more than 2% of the furnace’s total energy

• Central air conditioners

- Capped at $300

- Split systems: SEER > 16, EER > 13

- Package systems: SEER > 14, EER > 12

• Air source heat pumps

- Capped at $300

- Split systems: HSPF>8.5, EER >12.5, SEER >15

- Package systems: HSPF > 8, EER >12, SEER >14

• Water heaters

- Natural gas, propane, oil

- Capped at $300

- Energy factor > 0.82 or thermal efficiency at least 90%

• Electric water heaters

- Capped at $300

- Energy factor > 2.0

• Biomass stoves

- Capped at $300

- Thermal efficiency rating at least 75%

To claim the credit, the improvements must be made to an existing home that is your principal residence. New construction and rentals do not qualify. A lifetime limit of $500 is now in effect. Therefore, if you have already received $500 in these tax credits from tax years 2006-2010, you are not eligible for any additional energy tax credits.

The following improvements still qualify for 30% tax credit with no maximum limit:

• Geothermal heat pumps
• Solar energy systems
• Small wind turbines

In the case of these items, the credit applies to existing homes and new construction for principal residences and second homes. Rentals do not qualify. Installation costs are included in the credit.

The following qualifies for a tax credit of 30% of the cost (installation costs included), up to $500 per .5kW of power capacity:

• Fuel cells

- Residential fuel cell and micro-turbine system

- Efficiency of at least 30% and capacity of at least 0.5kW.

The credit applies to existing homes and new construction that will serve as your principal residence. Rentals and second homes do not qualify.

Please note:

• Not all Energy Star qualified products qualify for a federal tax credit.
• No federal tax credits are given for appliances.

We recognize that for many private taxpayers it is a challenge to stay on top of the ever-changing tax laws. The tax team here at “Your Best Interest” Financial Services, Inc. stays current on tax law changes by continually attending educational seminars and reading professional tax publications. Jackie Ward, the YBIFS Tax Operations Manager, will be posting here occasionally over the next few months to provide you with relevant information in an easy-to-understand format. Remember, our tax department is available to assist you year round, not just during tax season. If you ever need help, or just have a question, please call Jackie at 610-485-1010.

Stay tuned…

This is a guest blog by Jackie Ward, the Tax Operations Manager at “Your Best Interest” Financial Services, Inc.

Securities offered through Trustmont Financial Group (TFG) Inc. Member FINRA/SIPC. Advisory services offered through Trustmont Advisory Group (TAG) Inc. 200 Brush Run Road, Greensburg, PA 15601 724-468-5665 Neither “Your Best Interest” Financial Services, Inc. nor 401kPRO are affiliated with TFG or TAG.

Did You Take An Early Distribution From Your Retirement Plan?

If you took or will take an early distribution from your retirement plan in 2011 you should be aware that there is a potential tax impact. Here are ten facts about early distributions.

1. Payments you receive from your Individual Retirement Arrangement (IRA) before you reach age 59½ are generally considered early or premature distributions.
2. Early distributions are usually subject to an additional 10 percent tax.
3. Early distributions must be reported to the IRS and on your income tax return.
4. Distributions you rollover to another IRA or qualified retirement plan are not subject to the additional 10 percent tax if you complete the rollover within 60 days after the day you received the distribution.
5. The amount you roll over is generally taxed when the new plan makes a distribution to you or your beneficiary.
6. If you made non-deductible contributions to an IRA and later take early distributions from your IRA, the portion of the distribution attributable to those non-deductible contributions is not taxed.
7. If you received an early distribution from a Roth IRA, the distribution attributable to your prior contributions is not taxed.
8. If you received a distribution from any other qualified retirement plan, generally the entire distribution is taxable unless you made after-tax employee contributions to the plan.
9. There are several exceptions to the additional 10 percent early distribution tax, such as when the distributions are used for the purchase of a first home, for certain medical or educational expenses, or if you are disabled.
10. For more information about early distributions from retirement plans, the additional 10 percent tax and all the exceptions see IRS Publication 575, Pension and Annuity Income and Publication 590, Individual Retirement Arrangements (IRAs). Both publications are available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Early distribution rules are not the same for the IRS and the state taxing authorities. If you took an early distribution from a retirement account in 2011, you will receive Form 1099-R reporting the amount of the distribution. You must include Form 1099-R along with a record of the total of your contributions to the retirement account and all previous distributions from the retirement account with your tax preparation documents.

If you have questions about an early distribution and would like to discuss the possible tax implications call us at 610-485-1010 or e-mail Jackie at jward@ybifs.com.

Stay tuned for more…

This information is provided by Jacqueline M. Ward, the Tax Operations Manager at "Your Best Interest" Financial Services, Inc. She combines her education in accounting, years of experience and attention to detail to provide her clients with confidence and peace of mind that their tax returns are completed accurately and in a timely manner. Jackie is the mother of 7 children, 2 girls and 5 boys. Two of her sons are presently serving our country in the military; one in the U.S. Marine Corps and the other is a midshipman at the United States Naval Academy.

Securities offered through Trustmont Financial Group, Inc., Member FINRA/SIPC

Advisory services offered through Trustmont Advisory Group, Inc.

200 Brush Run Road, Greensburg, PA 15601 724-468-5665

Neither "Your Best Interest" Financial Services Inc. nor 401kPro are affiliated with either Trustmont Financial or Trustmont Advisory Group, Inc.

Who Qualifies as a Dependent?

For claiming the dependency exemption, a dependent is either a qualifying child or qualifying relative.

A qualifying child must satisfy all six of the following tests:

1. Relationship: The child must be the taxpayer’s child or stepchild (by blood or adoption), foster child, sibling or stepsibling, or a descendant of one of these.

2. Age: The child must be under the age of 19 at the end of the year and younger that your (or your spouse, if filing jointly), OR under the age of 24 at the end of the year, a full-time student for at least 5 months of the year and younger than you (or your spouse, if filing jointly), OR any age if permanently and totally disabled at any time during the year.

3. Residence: The child must have the same principal residence as the taxpayer for more than half the year. Exceptions apply in certain circumstances for children of divorced or separated parents, kidnapped children, temporary absences, and for children who were born or died during the year.

4. Support: the child must not provide more than one-half of his or her own support for the year.

5. Filing Status: the child is not filing a joint return for the year (unless that return is filed only as a claim for a refund).

6. Tie-breaker rules: the child must only qualify as your qualifying child or if the child meets the rules to be a qualifying child of more than one person, you must be the person entitled to claim the child as a qualifying child based on the tie-breaker rules.

A qualifying relative must satisfy all four of the following tests:

1. Relationship Test: The person cannot be your qualifying child or the qualifying child or any other taxpayer.

2. Member of Household/Relationship Test: The person must have lived with the taxpayer for the entire year, OR be related to the taxpayer. The following are considered relatives:

*taxpayer’s child, stepchild, adopted child, grandchild or great-grandchild

*taxpayer’s son-in-law or daughter-in-law

*taxpayer’s parent, stepparent, parent-in-law, grandparent or great-grandparent

*taxpayer’s brother, sister, half brother, half sister, stepbrother, stepsister, brother-in-law or sister-in-law

*taxpayer’s aunt, uncle, nephew, or niece, if related by blood

*foster child who was placed with the taxpayer by an authorized agency

3. Support Test: The taxpayer must provide over half the person’s support during

the year. There are special rules for children of divorced or separated parents.

Support includes amounts actually spent on food, clothing, a place to live,

medical and dental care, education, recreation, transportation, and similar

necessities.

4. Gross Income Test: Generally, the person’s gross income must be less than $3,650. This does not include nontaxable income such as welfare benefits or nontaxable Social Security benefits.

More information is available in IRS Publication 501 at www.irs.gov

If you have any questions please call us at 610-485-1010.

Stay tuned for more…

 

This is a guest blog by Jacqueline M. Ward, who is the Tax Operations Manager (TOM) at "Your Best Interest" Financial Services Inc. She combines her education in accounting, years of experience and attention to detail to provide her clients with confidence and peace of mind that their tax returns are completed accurately and in a timely manner.  Jackie is the mother of 7 children, 2 girls and 5 boys. Two of her sons are presently serving our country in the military; one in the U.S. Marine Corps and the other a midshipman at the United States Naval Academy.

To contact Jackie call 610 485-1010 or email her at jward@ybifs.com

Residential Energy Tax Credit

Taxpayers can claim a credit for certain qualifying home improvements placed in service in 2010. The property must be installed in the taxpayer’s principal residence that is located in the U.S. New construction, vacation and rental homes don’t qualify.

Qualifying improvements must be placed in service before Jan. 1, 2011.

Personal Energy Property Credit Qualifying Improvements:

Materials & cost of labor: high-efficiency heating and air conditioning systems, hot water heaters and stoves that burn biomass.

Materials only: energy-efficient windows and sky-lights, energy-efficient doors, qualifying insulation and certain roofs.

Credit equals 30% of what a homeowner spends on eligible energy saving improvements, up to a maximum tax credit of $1,500 for the combined 2009 and 2010 tax years.

Residential Energy Efficient Property Credit Qualifying Improvements:

Materials & cost of labor: solar energy systems (water heating and electricity), fuel cells, small wind energy systems, and geothermal heat pumps.

Credit equals 30% of what a homeowner spends, with no maximum. New construction does qualify.

Manufacturers must certify that their products meet the standards and must provide a written statement to the taxpayer included with the packaging of the product or in a printable format on the manufacturers’ website.

Additional information is available on the IRS website at www.irs.gov.

If you have any questions please call us at 610-485-1010.

 

Stay tuned for more…

This is a guest blog by Jacqueline M. Ward, who is the Tax Operations Manager (TOM) at "Your Best Interest" Financial Services Inc. She combines her education in accounting, years of experience and attention to detail to provide her clients with confidence and peace of mind that their tax returns are completed accurately and in a timely manner.  Jackie is the mother of 7 children, 2 girls and 5 boys. Two of her sons are presently serving our country in the military; one in the U.S. Marine Corps and the other a midshipman at the United States Naval Academy.

To contact Jackie call 610 485-1010 or email her at jward@ybifs.com

Medical Expenses

You can deduct on Schedule A, Form 1040, the amount of your medical and dental expense that is more than 7.5% of your AGI (Form 1040, line 38).

Medical expenses are deductible in the year paid, regardless of when the expense is incurred. Deductible medical expenses include expenses paid for the taxpayer, taxpayer’s spouse, and taxpayer’s dependent (for claiming an exemption). Deductible medical expenses include:

Prescription medications Health insurance premiums

Long-term care premiums Fees for doctors, dentists, etc

Fees for hospitals, clinics, etc Lab and x-ray fees

Expenses for qualified long-term care Eyeglasses and contact lenses

Medical equipment and supplies Medical transportation expenses

Lodging for medical purposes Day camp for children with disabilities

For more information about medical expenses, see IRS Publication 502: Medical and Dental Expenses, available at IRS.gov or by calling 800-829-3676.

If you have any questions please call us at 610-485-1010.

 

Stay tuned for more…

This is a guest blog by Jacqueline M. Ward, who is the Tax Operations Manager (TOM) at "Your Best Interest" Financial Services Inc. She combines her education in accounting, years of experience and attention to detail to provide her clients with confidence and peace of mind that their tax returns are completed accurately and in a timely manner.  Jackie is the mother of 7 children, 2 girls and 5 boys. Two of her sons are presently serving our country in the military; one in the U.S. Marine Corps and the other a midshipman at the United States Naval Academy.

To contact Jackie call 610 485-1010 or email her at jward@ybifs.com

IRS Kicks Off 2011 Tax Season

 

Below is a bulletin released by the IRS regarding the upcoming tax filing season. We encourage you to bring in all your tax documents as early as possible. We will prepare your tax returns and place them on hold until the IRS is ready to process the returns.

 

IRS Newswire                                                                              January 4, 2011

IRS Kicks Off 2011 Tax Season with Deadline Extended to April 18; Taxpayers Impacted by Recent Tax Breaks Can File Starting in Mid- to Late February

WASHINGTON — The Internal Revenue Service today opened the 2011 tax filing season by announcing that taxpayers have until April 18 to file their tax returns. The IRS reminded taxpayers impacted by recent tax law changes that using e-file is the best way to ensure accurate tax returns and get faster refunds.

Taxpayers will have until Monday, April 18 to file their 2010 tax returns and pay any tax due because Emancipation Day, a holiday observed in the District of Columbia, falls this year on Friday, April 15. By law, District of Columbia holidays impact tax deadlines in the same way that federal holidays do; therefore, all taxpayers will have three extra days to file this year. Taxpayers requesting an extension will have until Oct. 17 to file their 2010 tax returns.

The IRS expects to receive more than 140 million individual tax returns this year, with most of those being filed by the April 18 deadline.

Who Must Wait to File

For most taxpayers, the 2011 tax filing season starts on schedule. However, tax law changes enacted by Congress and signed by President Obama in December mean some people need to wait until mid- to late February to file their tax returns in order to give the IRS time to reprogram its processing systems.

Some taxpayers – including those who itemize deductions on Form 1040 Schedule A – will need to wait to file. This includes taxpayers impacted by any of three tax provisions that expired at the end of 2009 and were renewed by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act Of 2010 enacted Dec. 17. Those who need to wait to file include:

• Taxpayers Claiming Itemized Deductions on Schedule A. Itemized deductions include mortgage interest, charitable deductions, medical and dental expenses as well as state and local taxes (add link to Schedule A). In addition, itemized deductions include the state and local general sales tax deduction that was also extended and which primarily benefits people living in areas without state and local income taxes. Because of late Congressional action to enact tax law changes, anyone who itemizes and files a Schedule A will need to wait to file until mid- to late February.
• Taxpayers Claiming the Higher Education Tuition and Fees Deduction. This deduction for parents and students – covering up to $4,000 of tuition and fees paid to a post-secondary institution – is claimed on Form 8917. However, the IRS emphasized that there will be no delays for millions of parents and students who claim other education credits, including the American Opportunity Tax Credit extended last month and the Lifetime Learning Credit.
• Taxpayers Claiming the Educator Expense Deduction. This deduction is for kindergarten through grade 12 educators with out-of-pocket classroom expenses of up to $250. The educator expense deduction is claimed on Form 1040, Line 23 and Form 1040A, Line 16.

The IRS will announce a specific date in the near future when it can start processing tax returns impacted by the recent tax law changes. In the interim, taxpayers affected by these tax law changes can start working on their tax returns, but they should not submit their returns until IRS systems are ready to process the new tax law changes. Additional information will be available at www.IRS.gov.

For taxpayers who must wait before filing, the delay affects both paper filers and electronic filers. The IRS urges taxpayers to use e-file instead of paper tax forms to minimize confusion over the recent tax law changes and ensure accurate tax returns. 

If you have any questions please call us at 610-485-1010.

 

Stay tuned for more…

This is a guest blog by Jacqueline M. Ward, who is the Tax Operations Manager (TOM) at "Your Best Interest" Financial Services Inc. She combines her education in accounting, years of experience and attention to detail to provide her clients with confidence and peace of mind that their tax returns are completed accurately and in a timely manner.  Jackie is the mother of 7 children, 2 girls and 5 boys. Two of her sons are presently serving our country in the military; one in the U.S. Marine Corps and the other a midshipman at the United States Naval Academy.

To contact Jackie call 610 485-1010 or email her at jward@ybifs.com

Same as Last Year

Every year we get asked the same questions about Charitable Contributions:

• What is the “standard deduction” I can take for charitable contributions?
• How much did I claim last year?
• Do I need receipts?

The answers are simple. There is no “standard deduction”. It doesn’t matter how much you contributed last year. Yes, to be deductible you need receipts. In recent years the IRS began aggressively enforcing its requirements for documentation of charitable contributions. Our job is to help you remain compliant to the IRS and prepare accurate tax returns for you. Following are some of the guidelines set forth by the IRS, to aid you in preparing for tax season.

To be deductible, charitable contributions must be made to qualified organizations.

Cash contributions include those paid by cash, check, electronic funds transfer, debit card, credit card, or payroll deduction. You cannot deduct a cash contribution, regardless of the amount, unless you keep one of the following.

1. A bank record that shows the name of the qualified organization, the date of the contribution, and the amount of the contribution. Bank records may include:

• A canceled check,
• A bank or credit union statement, or
• A credit card statement.

2. A receipt (or a letter or other written communication) from the qualified organization showing the name of the organization, the date of the contribution, and the amount of the contribution.

You must get the acknowledgement on or before the earlier of:

• The date you file your return for the year you make the contribution, or
• The due date, including extensions, for filing the return.

If you make any noncash contribution, you must get and keep a receipt from the charitable organization showing:

• The name of the charitable organization,
• The date and location of the charitable contribution, and
• A reasonably detailed description of the property.

In addition, you must provide a written value of the property at the time of donation.

For more information about Charitable Contributions, see IRS Publication 526: Charitable Contributions, available at IRS.gov or by calling 800-829-3676.

If you have any questions please call us at 610-485-1010.

 

Stay tuned for more…

This is a guest blog by Jacqueline M. Ward, who is the Tax Operations Manager (TOM) at "Your Best Interest" Financial Services Inc. She combines her education in accounting, years of experience and attention to detail to provide her clients with confidence and peace of mind that their tax returns are completed accurately and in a timely manner.  Jackie is the mother of 7 children, 2 girls and 5 boys. Two of her sons are presently serving our country in the military; one in the U.S. Marine Corps and the other a midshipman at the United States Naval Academy. 

To contact Jackie call 610 485-1010 or email her at jward@ybifs.com