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E-NEWSLETTER
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October 15th Extension Deadline Approaching

If you were unable to file your 2013 individual tax return by April 15th and filed an extension, you should be aware that the extension gave you until October 15th to file your return or face a late filing penalty, which is 4 1/2% of the tax due per month, with a maximum penalty of 22 1/2% of the tax due. There is also a minimum penalty of the lesser of $135 or 100% of the tax due. If you prepaid your 2013 taxes timely through a combination or withholding or estimated taxes and will receive a refund when your return is ultimately filed, there is no penalty for filing late.

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Getting Around the Kiddie Tax
Congress created the “Kiddie Tax” to prevent parents from placing investments in their child’s name to take advantage of the child’s lower tax rate. Kiddie Tax rules apply most often to children through the age of 17, although children aged 18 through 23 who are full-time students may also be affected. Under the Kiddie Tax, a child’s investment income in excess of an annual inflation adjusted floor amount ($2,000 for 2014) is taxed at the parent’s tax rate rather than the child’s. These rules do not apply to married children who file a joint return with their spouse.

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Repeated Warning about Phone Scams
This office has repeatedly warned clients about scams related to taxes. The problem has only gotten worse, so we feel obligated to issue another warning. The scammers out there are pretty sophisticated and are trying to steal your identity and your money. This office doesn’t want you to become a victim, so please read this article and let family and friends know about this rapidly escalating scam based upon individuals’ fears of the Internal Revenue Service (IRS) and their overreaction to calls claiming to be from the IRS. You can even forward this article to your friends and family, and especially be sure to make your elderly family members aware of these scams.

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Alcoholism & Drug Addiction
Taxpayers are allowed a deduction for medical expenses paid during the taxable year, not compensated for by insurance or otherwise, for medical care of the taxpayer, the taxpayer’s spouse, or a dependent.

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Better to Sell or Trade a Business Vehicle?
When replacing a business vehicle, it does make a difference for tax purposes whether you decide to sell it or trade it for the replacement vehicle. If you sell a vehicle that was used for business, the resulting gain or loss is reported on your tax return. As a result, it is generally better to sell a vehicle if the disposition of the vehicle will result in a loss. If, on the other hand, the disposition will result in a gain, it would be better to trade it. Since trade-ins are treated as a tax-deferred exchange and any gain or loss is absorbed into the replacement vehicle’s depreciable basis, it is generally better to trade in a vehicle that would result in a gain.

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