You can claim a medical deduction on Schedule A on money you’re paying for the “diagnosis, cure, mitigation, treatment or prevention of disease or for the purpose of affecting any structure or function of the body.” Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation. [IRS]

Basically you can deduct anything the doctor prescribed. Of course, there’s a limit to this deduction and it’s set at 7.5% of your AGI from your medical expenses. So let’s see what can be deducted:

• Acupuncture - include the amount you pay for acupuncture, it’s a deductible treatment.
• Alcoholism - deduct the cost of the treatment center, including meals and lodging. You can also deduct transportation expenses to and from AA meetings.
• Stop-smoking programs
• Pregnancy test kits, birth control pills and legal abortion, as well as fertility enhancement treatments
• Breast pumps, bandages and medical supplies
• Chiropractor
• Contact lenses
• Lead-based paint removal
• Oxygen - yes sir, your oxygen is deductible. Of course, we’re not talking about the one you breathe by yourself, freely from the air. We mean the one that the medic prescribes for alleviating a breathing problem or some other medical condition.
• Weigh-loss programs – You can include in medical expenses amounts you pay to lose weight if it is a treatment for a specific disease diagnosed by a physician (such as obesity, hypertension, or heart disease).

Once you have determined which medical expenses you can include, figure and report the deduction on your tax return. A lesser known fact is that neither the medical practitioner prescribing the treatment nor the method of treatment have to be approved or sanctioned by the American Medical Association. You can claim a tax deduction, as long as the medic and treatment are valid within the patient’s religious or cultural context. Deductions for treatment by Christian Science practitioners and Native American medicine men have also been upheld by the IRS and the courts. [via]

Know any other weird medical expenses we can deduct? Let us know in a comment below! If you’re looking for more tax advice, drop us a line at matilda@taxplangroup.com or check out the rest of the blog.

Let’s get one thing clear: there is no way you can ever be 100% certain you’re not going to be audited. The Government itself admitted to randomly picking about 14,000 returns for “individual income tax research audits”. [source: IRS Tax Gap Report]

But these aren’t the only returns audited! There are things you do that increase your chances of getting audited. And with the state of the economy, you can expect the IRS to work even harder to get their tax money.

1. Make sure you hire the right professional
If the IRS thinks your accountant is messing with the numbers, then they might audit all his clients. This means you! So if your accountant is overly aggressive about deductions, red flags should go up. Read more about finding the right tax preparer for you.

2. Open up for business
If you’re self-employed you are far more likely to be audited, as “70 percent of the sole proprietor tax returns reporting losses had losses that were either fully or partially noncompliant.” So instead of filing a schedule C, make the effort and incorporate. People filing a Schedule S instead are less likely to get audited.

3. Be careful in filing your return
Take your time when filing your taxes, and double check once they’re done. The more mistakes you make, the more your tax return sticks out. The goal here is to get by without a glitch and make it easy for everyone to move past your return.

4. Report all income
Some people don’t realize that all income is taxable. Ok, so you might not report your garage sale and that one might slip through. But careful with those gambling winnings or other on-the-side projects. If you got money from those, the IRS already knows it. So it better show up in your return.

5. Trust the Internet
Ok, don’t blindly trust the Internet, but trust the IRS’s E-file system. They report a 19% lower rate of mistakes made online then on paper. It’s easier then filing paper, you can do it from home, it’s faster and it increases the chances of you getting your refund fast.

Know any other good ways of avoiding an audit? Please let us know, in a comment bellow. In the meantime, if you’re still looking for a professional with good credentials, drop us a line at matilda@taxplangroup.com and we’ll get back to you as soon as possible.

It’s fairly difficult to find the right professional in any field. This is even more true when the professional you’re looking for will have access to your financial information and will be responsible with getting your money back. So here are a few ways of getting the help you need:

1. Ask friends
References are always good in this business. Ask your friends and family how the go about filing their taxes. If they have a good tax preparer they can recommend, you should consider it.

2. Professional organizations
Check to see if the accountants you got recommended are members of any organization or professional association. It’s not a tell-tell sign, but it helps determine their interest in the field.

3. Make sure they’re available
They might be around now, but will they stick with you through an audit? You might need them again in August, so check to see if they’re still open then.

4. Talk to several professionals
It’s important to have a brief discussion with some of the “candidates” before you hire them to handle your taxes. It’s important to get the personal feel, not just their fact sheets. It also helps when you have more accountants you’d like, but not sure who to pick.

5. Compare prices
Final and, why not admit it, one of the most important differentiators is the price tag. You might like one of those professionals, but it the price is too high… Well then the price is simply too high. Go with the best price/ quality option.

Have fun picking the right CPA for your needs. And remember, a good pro can get you more money refunds, credits or deductions so investing in one usually pays off. If you’re still looking for a group of professional CPAs, look no more. Simply email us at matilda@taxplangroup.com and we’ll provide you with all the tax planning services you need.

It’s amazing what you can write-off if you interpret the law the right way. Many people have tried some pretty funny tricks to boost their IRS refund. One person even deducted a wedding present for their bosses’ wedding, as an employee expense for example. With appropriate motivation, people will do the strangest things.

1. Sex change deduction
People with gender identity disorders can benefit from an almost full medical expenses deduction. They can get the gender reassignment operations deducted, as well as the hormonal treatments. The IRS seems to draw the line however at breast augmentation surgeries, related to sex change. These are considered to be purely aesthetic and not a medical necessity.

2. Cat food
Apparently if you’re using cats for “business purposes”, such as warning off snakes and mice from your business property, you could try deducting cat related expenses.

3. Moving your pets
If you have a pet and you’ve recently relocated due to a job change, then by all means, deduct the cost of moving your kitten. Or your dog. Or your python. All pets are considered the same as your other personal belongings and therefore moving them is deductible.

4. Baby sitting fees
Ever hire a baby sitter while you were out doing volunteer work? Or maybe while you were attending a charitable event? Good news: you can deduct baby sitting fees as charitable contributions, even though the money didn’t go directly to a cause.

5. Landscaping
Are you freelancing or working from home? Well decorate your home office to give it a more professional look and you can deduct those expenses. Others have and got money back on their landscaping and repaired driveway, among others.

It’s all about knowing the law or having a professional who does help you. Here are some more extraordinary cases of refunds the IRS granted. There are many programs to help you file your taxes, but I bet none of them can make the above deductions happen. If you’re still looking for a group of professional CPAs, look no more. Simply email us at matilda@taxplangroup.com and we’ll provide you with all the tax planning services you need.

A few things, like there are some special deductions and credits you can still take advantage of in 2012. Moreover, you get 2 extra days on your deadline to file your return. Let’s start with that!

Your 2012 deadline for filing your return is April 17th
How come? Well April 15th is a Sunday and the 16th is Emancipation Day in the District of Columbia. According to the law, the deadline is the next day that isn’t a Saturday, Sunday or holiday. So there you have it, 2 whole extra days on your deadline this year!

You can still claim your tax credits
Some of the tax credits enacted in 2010 are still available. We’re talking about the American opportunity credit for parents and students, the enhanced child tax credit and the expanded Earned Income Tax Credit, to be precise.

Your Non-business Energy Property Credit Down to 10%
If you claim this credit you’ll likely get about 10 percent – up to a maximum of $500 – back on your energy-saving home improvements. That’s 20% down from 2009 and 2010.

Judging by the way the credit is figured, in most cases, only homeowners who have made these types of improvements for the first time in 2011 might qualify.

Self-employed? You still get to deduct your health insurance
Eligible self-employed individuals and S corporation shareholders can deduct their 2011 health insurance. Premiums paid for spouse or dependants are also covered by this deduction.

On the other hand you can say good-bye to the deduction from self-employment income that was used for determining self-employment tax. That was only available for 2010.

Have a Health Savings Account (HSA)?
You know that 10% additional tax on distributions from a health savings account (HSA), not used for qualified medical expenses? Yeah? Well it just got increased to 20%. And so did the additional tax on distributions from an Archer medical savings account (MSA), not used for qualified medical expenses. But the later was only bumped up from 15%.

You should make sure you are aware of all the changes that affect you when filing for 2011. You might qualify to receive more money from the IRS and not even know it. If tax planning is overwhelming, count on tax professionals to help you. Send us any tax inquiries you may have at matilda@taxplangroup.com and we will try to help.

Whether you’ve already filed your taxes this season or you’re still in the process of preparing your return, you should be aware of how to save on taxes now and in the future. Too many taxpayers are missing hundreds and thousands of dollars because they don’t know these tax breaks exist.

To put it simply, tax deductions lower your taxable income and therefore your tax liability, but they are not a direct reduction of the taxes you owe (that is a tax credit).

In this article, we are giving some tips on itemized and standard deductions that you can claim, to save you dollars from taxes.

1. Medical, dental, prescription drugs, and health care costs
If you, your spouse, and your dependents have incurred medical and dental expenses throughout the year, you may qualify to deduct the amount that exceeds 7.5% of your adjusted gross income. Furthermore, if your doctor recommends a strict weight loss program for medical reason, you may claim these expenses on Schedule A, as itemized deductions.

2. Self-employment deductions
If you are self employed, there are also deductions you may benefit from to help offset some expenses associated with your business. If you work at home and use your utilities, computer, and software, you will qualify for itemized deductions, such as office expense with equipment and furniture, cell phone expense, internet provider fees, advertising costs, education related to business, travel expenses related to business, etc.

3. Job search costs
Job search expenses are deductible, under the miscellaneous deductions category. These deductions are often expenses accrued when trying to produce income. When you itemize, you should consult with your tax preparer regarding the requirements to deduct these job search costs. You may deduct only the expenses that exceed the threshold of 2 percent of your adjusted gross income. Some examples of deductions are: resume services, job ad placement fees, travel expenses related to job searching efforts, and phone calls made for job hunting.

4. Education and student loans
Everyone knows how expensive education becomes with every year, but the IRS also seems to be understanding that, having introduced a tax break for education in 2009 and extending it through 2011. A student can qualify to deduct up to $4,000 of education expenses without having to itemize. This tax break can be used in connection with undergraduate, graduate and professional degree courses. Besides deductions, students may check if they qualify for a tax credit like the American Opportunity Tax Credit, or the Lifetime Learning Credit, which also covers postgraduate studies. However, you have to choose between deductions and credits, whichever advantages you the most.

Overall, planning itemized deductions requires more work and careful record keeping. Make sure you know the limitations there are in effect of earned income, in order to maximize the deductions you get. If tax planning is overwhelming, count on tax professionals to help you. Send us any tax inquiries you may have at matilda@taxplangroup.com and we will try to help.

IRS data shows that over 70% of US taxpayers are getting a tax refund, and an average refund of $ 3,303 per person was paid back in 2011. That could mean a lot of money that you are getting back from the IRS this year as well, so make sure you spend it wisely.

Many of us tend to think of tax refund money as “free money” and rush to spend it. In our previous blog article, we discussed the advantages of working with a tax preparer and how it could add hundreds of dollars to your tax refund. But what about the best way to manage your refund, to be the most advantageous in the long term.

1. Have a plan
Start planning before your refund check arrives. Review all your debts, expenses, savings, and investments, and prioritize what you need to cover first with extra money. You will feel much more fulfilled when you have organized and managed your refund according to priorities.

2. Pay off your high-interest credit cards
This is definitely not an enjoyable way to spend your refund, but you know you have to pay off your debts, and your refund money is just in time for that. If you have a high-interest credit card you can easily bring down the level of debt by making extra payments. After all, this is the smartest investment you could make, and it will make you richer in the long run.

3. Start saving
If saving is not something you are already doing, you have to consider starting a “rainy day” fund. This could be an amount of money to cover unexpected costs for the next three to six months. You will feel more secure in case an unexpected financial emergency arises. Also, you won’t have to use your credit card and increase high-interest debt.

4. Make necessary expenses
No matter how much we plan, when it comes to our personal needs, we are always subjective. Maybe you feel like having a great holiday, go ahead and use your refund for that. After all, it is always worth it to invest in your happiness and your health. Or you may think it necessary to spend the tax refund on home improvements, investing in better health insurance, or paying for your kids’ education. If you are working with a tax preparer, check if you can claim these expenses as a deduction next year. You will see how consistent planning pays off in the long run!

To conclude, we advise you to spend smart and stay informed. There are many tax professionals out there whose job is to help you with that.

Visit our colleagues at The Tax Plan Group for further advice, at the office near Penn Station, 349 5th Avenue, 5th Floor, New York, NY 10016, call (646) 462-9853, or write to me at matilda@taxplangroup.com.

Tax laws are becoming more complex each year, and an increasing 60% of taxpayers are relying on professionals to prepare their returns. In the last tax season, 84 million taxpayers actually paid for tax professionals’ services.
However, with tax calculation software gaining more recognition, many people still prefer to file their returns on their own. But what are the limitations of using tax software and where can a tax professional add value, and potentially a few more hundred dollars to your refund?

Firstly, we want to point out that you should check the IRS recommendations before choosing your tax preparer: http://www.irs.gov/individuals/article/0,,id=133088,00.html
Secondly, we will go through the advantages of working with a tax preparer, which could be your starting point when deciding whom to work with.

Tax Policy Awareness
Tax news is in the press almost every day, but how much do you know about the latest policies, what are miscellaneous deductions, or the tax credit conditions? Most people qualify for a $5,000 tax credit but they don’t know it exists or how to get it. Also, under miscellaneous deductions there are lesser known expenses, like cab fare to the doctor’s office, or the money you lost gambling, that help get you a bigger refund during tax time. A professional tax preparer knows all these “tricks” and will help you optimize your return, while doing all the paperwork for you!
Also, a tax professional’s help could save you from IRS penalties that may result from you incompletely or erroneously filling in your return, as a result of not having enough information about the current tax regulations.

Specialized Tax Advice
Depending on the type of return you need to file, you can always access tax advice tailored to your needs, rather than learning tax accounting on your own. You may need to work with a tax professional specialized in small business returns (Schedule C), S Corporations, C Corporations, investment income, rental deductions, or your individual tax return. Unlike volunteer tax preparers or tax software, licensed tax professionals are able help you with audit or interface with IRS for collection issues. The IRS recognizes Enrolled Agents (EAs), Certified Public Accountants (CPAs) and attorneys to represent you at audits and collections. Some people may argue these services cost money, but here is the good news: these are deductible expenses!

Expertise, Reduce Time, and a High Refund!
Working with the right tax preparer will ensure your tax returns are prepared with expertise, reduce the time required to file, and result in a potentially higher tax refund check.
At The Tax Plan Group, our tax professionals will help you comply with evolving tax laws and maximize the benefits provided by the IRS to receive a larger refund. Get in touch with us to discuss more on how we can help at matilda@taxplangroup.com !

All taxpayers expect to get their refund quickly from the IRS. However, when trying to prepare tax returns on your own, you find yourself overwhelmed with the amount of tax information: conditions, deductions, exclusions, etc. Some taxpayers may run the risk of miscalculating a lower refund or e-filing an inaccurate tax return when they’re preparing the return on their own!

In this post, we will provide you with tips and resources you need to access, in order to get your tax refund as quickly as possible!

To start with the good news, the IRS announced last week that all taxpayers will have until April 17th to file their 2011 tax returns, thus extending the deadline by two days due to the Emancipation Day Holiday. Taxpayers requesting an extension will have until October 15th to file their 2012 tax returns.

There are many questions all taxpayers want answered now: “What can I do better to get my refund faster?”, “How long does it take the IRS to give my tax refund?”, “Where do I check the status of my tax refund?”,  “What if the tax refund I get is smaller than what I estimated?”. The Tax Plan Group will guide you through these questions one by one.

What can you do better to get your refund faster?

Our advice and the quickest way to get your tax refund is to have it deposited directly into your bank account. Of course, you can always request that the IRS issue a paper check, which you will receive by mail and takes longer. To avoid silly delays, take some time to review your return with your tax preparer. The IRS reports that a common mistake is not providing the correct Social Security number!

How long does it take the IRS to pay your tax refund?

Generally, you’ll get your tax refund in six to eight weeks from the date the IRS receives your tax return. If you’re working with a professional tax preparer, you’re more likely to get it faster since it will be e-filed, and you have the guarantee of an accurate tax return. Otherwise, if your return is more complicated, is missing information, or has inaccurate information, it may take several months to get it.

At The Tax Plan Group our professionals will help you file your tax return documents, saving you time, reducing the risk of an IRS audit, and potentially adding hundreds of dollars to your tax refund.”

Where do you check the status of your tax refund?

Once you filed your federal return, you can track your refund by using the “Where’s My Refund?” online tool provided and secured by the IRS. You can either access it using the IRS2Go phone app or from the page of www.IRS.gov.  You can access this tool 72 hours after the IRS acknowledges the receipt of your e-filed return.

You will be asked to provide your Taxpayer Identification Number, your filling status, and the exact amount of money you estimated for refund. But, be aware that some information is NOT available on “Where’s My Refund”, such as:

• Amended Tax Return (Form 1040X) Information
• Business Tax Return Information
• Prior Year Refund Information

Starting this late January, New Yorkers can also check their refund status here: https://www8.tax.ny.gov/PRIS/prisStart

What if the tax refund you get is smaller than what you estimated? 

What the IRS recommends is that you wait for a notice explaining this difference, and then follow the instructions on that notice. If you want to contest your tax refund, you can do this after two weeks from getting your refund, by calling (800) 829-1040. You may go ahead and cash your refund, and the IRS will determine if they owe you more, and send a separate check.

Our professionals at The Tax Plan Group will help you take advantage of all tax credits and deductions you might miss when filing by yourself, in order to maximize your refund during tax time! Need help? S by our office near Penn Station, 349 5th Avenue, 5th Floor, New York, NY 10016, call (646) 462-9853, or write to me at matilda@taxplangroup.com.

Tax season is here! In just a few more days the IRS will begin accepting your tax return filings. So here are the most important dates this tax season. Later on we’ll tell you what you can do to get ahead of the rush and how to rapidly submit all necessary documents to maximize your refund.

January 1st: Tax season officially begins! This is the time to gather your documents and basically make sure you have everything you need at hand.

January 17th: The IRS starts accepting e-files. This is also the time to pay your forth quarter estimated tax. However, if you file this and pay your balance in full by January 31st, you won’t get any penalties.

January 31st: Last day for your employer to provide your W-2 form. It’s also the deadline for the 1099 Form. You need to file this for specific incomes, non-employee related: bank dividends, interest etc.

February 15th: By this time, if you claimed exemption from income tax withholding, you must file a new W-4 Form with your employer.

March 1st: Farmers and fishermen who have a balance due on their taxes have a deadline to file their individual tax return. This is also the deadline for paying the due balance without any penalties.

April 17th: By this time you have to file all your individual tax returns. If you haven’t found the time to get all your papers in order, you can file for an automatic 6 month extension (Form 4868). Payment of the tax is still due this day. You can pay this while you file for an extension.

June 15th: The date marks the deadline for US citizens living abroad to submit their individual tax returns and pay any tax due. They can also post for a 4 month extension, same as citizens living in the U.S.

September 17th: Time to pay your 3rd quarter estimated taxes for 2012.

October 3rd: Marks the deadline for the self-employed or employers to establish a simple IRA.

October 15th: If you’ve asked for an extension with the 4868 Form, you’ve finally reached your deadline. Last chance to file those individual tax returns.

So this is it folks! Start gathering those papers, because the deadlines are approaching. Contact your accountant or us at matilda@taxplangroup.com and get things moving!