Health Insurance

Some of you will receive a Form 1095 (do not throw this away, we will need the information to prepare your 2017 federal tax return). If you have not received a Form 1095, we are required to ask you several questions about your health care coverage to help you avoid penalties and comply with the federal requirements. If you received a reduction in your health insurance premiums based on information you furnished Covered California, the IRS will match your income and household size as reported on your tax return with what you previously estimated when you applied for Covered California. If the amount of your health insurance premium reduction (your credit} was larger than it should have been, it is possible you may have to repay money to the IRS when you file your tax returns.

Medical itemized deductions

For 2017 in order to deduct medical costs and health insurance as an itemized deduction, your medical expenses must now exceed 10% of your income (7.5% if you are over age 65}. If you think your 2017 medical expenses exceed this threshold, take the time to assemble and add up your medical costs. If you are sure your medical expenses are below the percentage of income levels, there will be no benefit in adding up your medical expenses. If you are self-employed, we will need to know the amount you paid for medical insurance, since you can deduct those expenses even if they are below the percentage of income limits.

Filing of dependent tax returns

We strongly advise that we prepare your dependent children's tax returns, especially if that child is a student, to avoid a discrepancy that could cost you hundreds or thousands of dollars in lost tax credits or penalties. We want to make sure all information matches when the IRS electronically crosschecks returns.

Mortgage Interest

If you are paying mortgage interest you will receive a Form 1098 which states the interest you have paid on your mortgage in 2017. Please furnish us with that information, as the IRS is checking the deductions you claim with their records. If you refinanced your mortgage, furnish us with refinancing closing statements, and information as to how any money withdrawn was used, as we may have to report that on your tax return.

Foreign Bank Account Traps

If you have ANY bank account, retirement account, investment account, and/or business ownership interest with a value of $10,000 or more in a foreign country, you must advise us since special reporting rules now apply. Failure to disclose this to us will result in severe penalties, as well as additional fees in representing you in any dispute with the IRS. The United States has negotiated agreements with foreign countries to require them to report foreign income to the U.S. to ensure tax reporting compliance.

Charitable Donations

As in all prior years, all charitable donations reported on your tax return must have receipts to substantiate the deduction. If you made a donation over $250 you must have a properly dated letter from that charity acknowledging the donation, which clearly states that no goods or services were received in return for the contribution.

Rental Property

In 2017 the IRS is requiring information from rental property owners, to include the physical location, type of property (commercial or residential), the number of days it was rented, and the number of days for personal purposes. Please take time to compile this information and provide it to us so we can correctly prepare your tax returns.

At Moats & Hebebrand CPAs we have the knowledge to sit down with you and explain and prepare your tax returns in a very competent and professional manner. Trust the professionals. It is your money and we want you to pay only the tax you owe. Call today for an appointment!

The office of Moats & Hebebrand CPA's makes a concerted effort to stay on top of the changes in the tax laws so you don't have to. Let us prepare your 2017 tax returns so you know they are done right! We are also open all year to assist with tax planning and to take care of our customers.