Hicksblog

Qualified Long-Term Care Insurance premiums are deductible as itemized medical deductions as follows: Age 40 and under $320.00, Age 41-50 $600.00, age 51-60 $1,190.00, Age 61-70 $3,180.00, Age 71 and over $3,80.00. A lot of people do not realize that in many cases Long-Term Care Insurance can be use for in home care. Joe is a tax advisor, Investment advisor and holds an insurance license in Texas.

Joe Hicks is a CPA and also a PFS ( and is a member of the AICPA Personal Financial Planning Section.

the following from the AICPA PFP Section.

On December 11th, the full House of Representatives adopted a sweeping financial re-regulation bill, the “The Wall Street Reform and Consumer Protection Act of 2009” (“Act”), by a vote of 223 to 202. The Act consolidated previously separate bills into one, including the Consumer Financial Protection Agency Act, the Investor Protection Act, the Private Fund Investment Advisers Registration Act as well as the Senior Investor Protection Act of 2009. The AICPA served as an advocate on several provisions of interest to CPA financial planners.

The AICPA sent a letter of support to Chairman Frank and Congressman Cohen for the amendment which stripped language giving the SEC explicit authority to allow the Financial Industry Regulatory Authority (FINRA) to extend its inspection, rulemaking and enforcement jurisdiction to federally-registered investment advisers “associated with” a broker dealer. We believe strongly that the SEC and states are best positioned to oversee investment advisers under the Advisers Act and do not believe that FINRA’s broker-dealer perspective is conductive to adequate regulation of investment advisers.

As passed by the House, H.R. 4173 includes the following provisions, among others:

The bill would create a new Consumer Financial Protection Agency. Under a provision won by the AICPA, the House recognized CPAs who provide financial planning, tax planning and tax return preparation, as well as financial literacy education to consumers should not be subject to new and duplicative CFPA regulation.

Fiduciary duty of care applicable to Broker-Dealers and their representatives when providing investment advice to retail customers. The PFP Executive Committee supports this elevated standard of care.
GAO Study on the issue of regulation and oversight of financial planning. AICPA will ensure that its feedback is considered once details ensue on this study. Our goal, first and foremost, is to protect the public’s best interest, while also recognizing the regulatory framework that currently exists for CPAs (state boards of accountancy and the SEC/states, if also an investment adviser). We believe that additional regulation of the profession of financial planning is duplicative for CPA financial planners.
AUM threshold for investment advisers to register with the SEC increased from $30 million to $100 million. If enacted into law, a change in the AUM threshold would impact many advisers. The PFP Team is aware of this and will monitor the issue closely, remaining vigilant for transitional guidance we can share with our members.

Joe H. Hicks CPA

Joe Hicks CPA can provide many consulting, Tax and Financial Services. His home page is located at http://www.txusa.com which has his phone number, fax number and e-mail address. He can push documents back and forth by e-mail in pdf format or by fax. Now is the time of the year to look at tax and Financial services. Current year-end tax planning information is now on his web site.

Work Opportunity Tax Credit

Businesses have until August 17
to Take Advantage of Certain Tax Credits
June 4, 2009 – Businesses planning to claim the newly-expanded work opportunity tax credit (WOTC) for eligible unemployed veterans and unskilled younger workers hired during the first part of 2009 have until August 17 to request the certification required for these workers, according to the Internal Revenue Service.

IRS Audits

The Audits are Coming
Starting November, the IRS National Research Program (NRP) will conduct detailed employment tax examinations of certain taxpayers. The selection process for an NRP audit is determined based on a statistical sample. It does not necessarily mean that an employer has incorrectly filed a return. The program will last for three years. Although the IRS may look at any line on an employment tax return during the examination, it will primarily focus on worker classification (employee vs. independent contractor), fringe benefits, officer's compensation, and reimbursed expenses. This study serves some of the tax gap concerns listed in the Government Accountability Office’s Report to Senate Finance in January 2009.

Preparing false tax returns

WASHINGTON – The Justice Department announced today that a federal court has permanently barred two additional former employees of Preston Tax Services, Inc., from preparing federal tax returns. Chief Judge Sidney Fitzwater of the U.S. District Court for the Northern District of Texas signed injunctions permanently barring Ethel Washington of Dallas, Texas, and Jason Jeroski of Mesquite, Texas, from preparing tax returns. The court previously barred Jeroski’s and Washington’s former employer, Tina Preston, and her Dallas firm, Preston Tax Services, Inc., from preparing federal tax returns. The court also previously enjoined three other former Preston employees–Gayla Oladele, LaTavia Glover, and Tyrone Williams–from preparing tax returns.

New Tax Law Extends NOL Carryback Period

March 17, 2009 – The Internal Revenue Service has announced that small businesses with deductions exceeding their income in 2008 can use a new net operating loss tax provision to get a refund of taxes paid in prior years.

To accommodate the change in tax law, the IRS updated the instructions for two key forms — Form 1045 and Form 1139 — that small businesses can use to make use of the special carryback provision for tax year 2008. These forms are used to accelerate the payment of refunds.

The new provision, enacted as part of the American Recovery and Reinvestment Act of 2009, enables small businesses with a net operating loss (NOL) in 2008 to elect to offset this loss against income earned in up to five prior years. Typically, an NOL can be carried back for only two years. The IRS released legal guidance in Revenue Procedure 2009-19 outlining specific details. Some taxpayers must make the election to use this special carryback by April 17, 2009.

IRS Releases Guidance on Ponzi Scheme Theft Losses

	The Internal Revenue Service earlier this week issued detailed guidance for investors who have lost money in a Ponzi scheme, such as the one Bernard Madoff recently pleaded guilty to running. In answering 7 questions about theft loss deductions, the IRS made it clear that Ponzi scheme losses are theft losses, not subject to the itemized deduction limits, and that investors can carry such losses back 5 years. The IRS also created a safe harbor to allow investors to avoid potential problems in proving how much money lost was fictitious income versus a return of capital. Read this article that explains how to get this relief on clients’ 2008 tax returns.

Tax Tips for Active Military Personnel and Veterans

The following information was provided by the American Institute of Certified Public Accounts.The U.S. government offers special tax relief to members of the U.S. armed forces and veterans in recognition of their sacrifices to protect our nation.

Active Members of the Military

For those who are currently on active duty in the military, the pay of enlisted personnel and warrant officers serving in combat zones is tax-free, as is commissioned officers’ pay up to certain limits. Those who are injured and hospitalized do not pay tax during their hospitalization, within certain guidelines.

Extended time to file and pay their taxes is allowed for military personnel who serve in designated combat zones and civilians who serve in support of them, or those who are hospitalized outside the U.S. as a result of an injury received in a combat zone. They do not have to file or pay taxes until 180 days after their last day in the combat zone or of hospitalization. The extension also generally applies to the spouses of military personnel who are serving in combat zones.

Active members of the military who die in a combat zone, or die from wounds or disease received in a combat zone or in a terrorist or military action, can have their taxes forgiven for the year in which they died and perhaps for earlier years.

While members of the military on active duty are not required to pay taxes on their income they are permitted to use the amount of earned income to determine their eligibility for an Individual Retirement Account. Additionally, they can elect to make these contributions retroactive to 2004.

More information can be found in IRS Publication 3, "Armed Forces’ Tax Guide," which is available online. Visit www.irs.gov, then click on "Individuals" and look for "Tax Information for Members of the U.S. Armed Forces," or call the IRS free at (800) 829-3676 and ask for a paper copy. Live telephone assistance is available from the IRS by calling (800) 829-1040.

Veterans Pay is Taxable, but Not Benefits

Military retirement pay that is based on age or length of service is taxable, and must be included in income. On the other hand, veterans’ disability retirement payments received from the U.S. Department of Veterans Affairs are generally tax-free. Benefits for veterans administered by the department are not considered income. Veterans’ benefits include:

1. Education, training and subsistence allowances paid to veterans or their families;
2. Disability compensation and pension payments for disabilities paid to veterans or their families;
3. Grants paid by the Department of Veterans Affairs for homes designed for wheelchair use or for vehicles for veterans who have lost their sight or the use of their limbs;
4. Veterans’ insurance proceeds and dividends paid to veterans or their beneficiaries;
5. Interest on insurance dividends left on deposit with the Department of Veterans Affairs;
6. Dependent-care assistance benefits; and
7. Death benefits paid to survivors of military personnel members who died after Sept. 10, 2001.

Keep Military Records Handy

To qualify for benefits and to verify status as a veteran, access to military records may be needed. Find information on obtaining those records at the Department of Veterans Affairs Web site at http://www.va.gov/vaforms/.

Payroll Tax Credit for Required Employer COBRA Payments

The American Recovery and Reinvestment Act of 2009 provides a subsidy for the cost of COBRA coverage for employees who are involuntary terminated between September 1, 2008, and December 31, 2009. The subsidy also applies to the employees family members who were covered under the plan immediately prior to the termination of employment. Assistance eligible individuals pay a reduced premium equal to 35% of the full COBRA premium. The employer pays the other 65% and then is reimbursed for the subsidy by the federal government by taking a credit on its quarterly payroll tax return (Form 941).