Tax Tips

If you’re self-employed and paying your own health insurance, you may be eligible for a large tax deduction. Those who can claim the deduction include:

  • Small businesses, sole proprietorships, qualified joint ventures or farmers reporting income on Schedule C, Schedule C-EZ or Schedule F.
  • Partners with self-employment earnings reported on Schedule K-1.
  • Shareholders who were paid wages reported on Form W-2 and who own more than two percent of the outstanding stock of an S corporation.
  • Taxpayers who used an optional method to figure net earnings from self-employment on Schedule SE.

    Keep in mind that the deduction is not available if you’re eligible to participate in an employer- subsidized health plan maintained by your employer or your spouse’s employer.

How to come prepared

Your tax appointment—it comes around every year and it’s always a good idea to start preparing for
it early. In preparation, you should contact me soon to reserve a time for your appointment. Be sure to choose a time when you expect to have all of the documents you need for your appointment. If you’re not sure what you need to bring, give me a call and I’ll help guide you. For now, here are a few things you’ll want to bring along, if they’re applicable to your unique circumstances:

  • W-2 forms from all employers that you had throughout the year. Employers will issue W-2 forms by January 31. If you discover that a form is missing, contact the employer.
  • 1099 forms reporting income from interest, dividends, pensions, self-employment, government payments or the sale of property.
  • A list of other income that you’ve received during the year, even if you don’t have specific statements.
  • Schedule K-1, if you were a member of a partnership, a stockholder in an S corporation or a beneficiary of a trust or an estate.
  • Stock sale information about the sale and original cost of stock.
  • Real estate sale information showing the cost, sales prices and expenses of the sale.
  • Records of all income received if you’re a business owner or farmer. Be sure to include expense records for inventory, supplies, business equipment and other business expenses. Payroll records may also be necessary.
  • Child care information, including the name, address and ID number of the provider(s), as well as the amount of the expense.
  • Moving expense records for unreimbursed job-related moves of more than 50 miles.
  • Medical expense records, including those for prescription drugs, doctor, dental, hospital bills, medical insurance premiums and the mileage to and from the doctor’s office. These expenses are deductible if they exceed 10% of your adjusted gross income (7.5% for ages 65 and older until December 31, 2016).
  • Health Insurance forms. If you participate in the Health Insurance Marketplace, be sure to bring along Form 1095-A, which you’ll receive in the mail.
  • Charitable contribution receipts. All contributions of any amount require a receipt. Single contributions of $250 or more require a detailed statement from the charitable organization prior to the filing of your taxes.
  • Deductible expense records incurred as an employee, including union dues and tax preparation fees.
  • Property tax bills and mortgage interest statements. You may be able to itemize deductions if you own a home. The interest on home equity loans and a vacation home may also be deductible.

If relevant to your circumstances, you may also need to bring in social security numbers for all dependents, Form 8332 (if you are a noncustodial parent), last year’s tax return and any postcards or tax booklets received from the IRS. If you have any questions about whether you have all of the documents and information you need for our appointment, feel free to give us a call. We’ll be glad to help.

A legitimate service from the IRS

id-fraudNew IRS scams continue to surface in an attempt to take your money or personal information. Deceitful communications come via phone, email, post and sometimes even a knock on your door. It’s important to know that the IRS does occasionally contact taxpayers, but when they do, it’s most often by mail.

Sometimes the IRS needs to verify a taxpayer’s identity and will do so by sending a Letter 5071C. This occurs when the IRS stops a suspicious tax return that contains a real taxpayer’s name and/or social security number but is flagged for identity theft. Taxpayers who receive requests from the IRS to verify their identity should use the Identity Verification Service website at This is the fastest and easiest way to complete the task. If you receive Letter 5071C, please contact me so that I can help you answer the series of questions about your identity and tax return history.

Once the IRS verifies your identity, you can confirm whether you filed the return in question. If you did not file the return, the IRS can take steps to assist you. If you did file the return, the IRS will need approximately six weeks to process it and issue a refund.

If you receive an email, letter or phone call and you’re in doubt as to whether it’s from the IRS, contact me so we can determine if the correspondence is real or simply an attempt to steal your identity.