Mcdonnell Randy

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MCDONNELL ACCOUNTING (PH 228 374-2374) IS LOCATED ON THE CORNER OF PASS ROAD AND HILLER DRIVE IN BILOXI. IN 2010, RANDY MCDONNELL, RACHEL ROBERTSON, PATTY LANKFORD, DARLENE EGGERT, AND CATHY BROOME WILL BE PREPARING 2009 INCOME TAX RETURNS. WE WILL BE OPEN MONDAY-SATURDAY 9AM TO 9PM.
***** PLEASE DO NOT FAIL TO LOOK AT ITEMS 18, 19, AND 20 IN THE FIRST NUMBERED LIST BELOW. THEY CAN MEAN TAX SAVINGS FOR A LOT OF OUR CLIENTS. PLEASE BRING DOCUMENTATION FOR THESE ITEMS.
*****IF YOU RECEIVE SOC SECURITY OR RAILROAD RETIREMT BENEFITS, S S I, OR V A BENEFITS, YOU NEED TO TELL US IF YOU RECEIVED AN "ECONOMIC RECOVERY PAYMENT" OF UP TO $250 OR $500 DURING 2009, AS THIS WILL REDUCE A NEW CREDIT ON YOUR FORM 1040.
NEW CLIENTS ARE URGED TO BRING A COPY OF THEIR 2008 TAX RETURNS AND BIRTH DATES OF DEPENDENTS. EVERYONE SHOULD BRING FORMS W-2, K-1, 1099 (INCL SOCIAL SECURITY BENEFITS), COST AND SELLING PRICE OF REAL ESTATE (TWO-PAGE SETTLEMENT SHEETS ARE NEEDED) OR STOCKS AND BONDS SOLD. SELF-EMPLOYED PEOPLE NEED TO BRING FIGURES FOR TOTAL REVENUES/SALES, EXPENSES BY CATEGORY, BUSINESS MILEAGE, AND ENDING INVENTORY IF APPLICABLE. LOOK OVER LAST YEAR'S RETURN TO HELP YOU PREPARE FOR THIS YEAR.

EVERY YEAR SOME OF OUR CLIENTS TAKE TAX BEATINGS BY TAKING LARGE WITHDRAWALS FROM THEIR PENSION PLANS. EVEN ASIDE FROM POSSIBLE 10% PENALTIES ASSESSED BY IRS FOR EARLY WITHDRAWALS, THE MARGINAL TAX RATE CAN BE VERY COSTLY FOR THESE TAXPAYERS. USING A SIMPLIFIED EXAMPLE, A TAXPAYER WITH INCOME OF $50,000 WILL PAY NO INCOME TAX ON THE FIRST $10,000 OF HIS INCOME BECAUSE OF THE PERSONAL EXEMPTION AND STANDARD DEDUCTION. HE MAY PAY A TAX RATE OF 15% ON THE NEXT $30,000, THEN 25% ON THE FINAL $10,000. THE $7,000 OF TAX PRODUCES AN OVERALL RATE OF 14%. HOWEVER, IF HE DRAWS $10,000 OUT OF A PENSION PLAN AND NOW HAS A TOTAL OF $60,000 INCOME, HE WILL BE PAYING A MARGINAL TAX RATE ON THE $10,000 PENSION MONEY OF 25% OR $2,500. ONE REASON GIVEN TO JUSTIFY THESE WITHDRAWALS IS THAT OUR CLIENTS WANT TO PAY OFF DEBT BEFORE THEY RETIRE, BUT THIS IS COSTLY. WE RECOMMEND GRADUAL WITHDRAWAL OF RETIREMENT FUNDS AFTER YOU RETIRE, WHEN YOU ARE USUALLY IN A LOWER BRACKET. IF YOU NEED MONEY, GET A LOW-INTEREST HOME EQUITY LOAN OR A LOAN ON YOUR PENSION PLAN.

LIST OF TAX CREDITS AND DEDUCTIONS AVAILABLE WITHOUT ITEMIZING
1. INTEREST PAID ON COLLEGE LOANS. ELIGIBLE LOANS COVER TUITION, FEES, AND ROOM AND BOARD FOR TAXPAYERS OR DEPENDENTS OR FORMER DEPENDENTS.
2. HIGHER EDUCATION CREDITS AND DEDUCTION FOR COLLEGE TUITION AND REQUIRED FEES, BOOKS, AND COURSE MATERIALS (NOT ROOM AND BOARD) FOR TAXPAYERS AND DEPENDENTS. HOPE CREDIT (RENAMED AMERICAN OPPORTUNITY TAX CREDIT) NOW APPLIES TO THE FIRST FOUR YEARS OF COLLEGE. STUDENT MUST BE AT LEAST HALF-TIME. LIFETIME LEARNING CREDIT IS ALLOWED FOR ANY COLLEGE COURSE, INCLUDING THOSE TAKEN TO IMPROVE JOB SKILLS. ELIGIBLE AMOUNTS FOR THESE CREDITS DO NOT INCLUDE EXPENSES PAID BY GRANTS OR SCHOLARSHIPS, BUT DO INCLUDE AMOUNTS PAID WITH LOANS.
3. CHILD TAX CREDIT FOR DEPENDENT CHILDREN UNDER 17 ($1000 PER CHILD).
4. IRA CONTRIBUTIONS (WITH INCOME LIMITS ON DEDUCTIBILITY FOR A PERSON COVERED BY A PENSION PLAN). NON-WORKING SPOUSE CAN CONTRIBUTE TO AN IRA. MAXIMUM CONTRIBUTION IS $5,000 ($6,000 FOR THOSE 50 OR OVER). FOR 2009 RETURNS, CONTRIBUTIONS CAN BE MADE AS LATE AS APRIL 15, 2010.
5. INTEREST PENALTY OR FORFEITURE DUE TO EARLY WITHDRAWAL OF A CERTIFICATE OF DEPOSIT (CD).
6. ALIMONY. NAME AND SOCIAL SECURITY NUMBER OF EX-SPOUSE MUST BE LISTED.
7. BAD DEBTS (MONEY OWED TO YOU). GENUINE EFFORT TO COLLECT MUST BE MADE. IF YOU PAY A CONTRACTOR AN ADVANCE TO DO WORK ON YOUR HOUSE AND HE DISAPPEARS, THIS MAY BE DEDUCTIBLE AS A BAD DEBT.
8. MOVING AND TRAVEL EXPENSES TO TAKE A JOB IN ANOTHER LOCALITY (INCLUDES 24 CENTS PER TRAVEL MILE).
9. CHILD-CARE CREDIT FOR EXPENSES INCURRED WHILE WORKING, LOOKING FOR WORK, OR GOING TO SCHOOL. YOU MUST LIST NAME, ADDRESS, AND TAX ID NUMBER OF CARE PROVIDER. CARE FOR DISABLED ADULTS IS ALSO ELIGIBLE FOR CREDIT.
10. CREDIT FOR ELDERLY OR PERMANENTLY DISABLED.

12. HAVE YOU REMEMBERED ALL POSSIBLE DEPENDENTS? ARE YOU 65 OR OLDER OR BLIND?
13. DID YOU PAY ANY ESTIMATED TAX TO IRS OR YOUR STATE DURING THE YEAR, OR DO YOU HAVE A CREDIT FROM OVERPAYMENT OF LAST YEAR'S TAX?
14. DID YOU PREPAY COLLEGE TUITION UNDER MISSISSIPPI PROGRAMS IMPACT OR MACS?
15. RETIREMENT SAVINGS CONTRIBUTIONS CREDIT FOR IRA, ROTH, 401-K IF INCOME UNDER $55500 MFJ, $27750 S OR $41625 HH.
16. SCHOOL TEACHERS CAN DEDUCT UP TO $250 OF SCHOOL SUPPLIES.
17. REAL ESTATE OR PROPERTY TAXES CAN NOW BE DEDUCTED EVEN IF YOU DON'T HAVE ENOUGH DEDUCTIONS TO ITEMIZE ON SCHED A AND MUST TAKE THE STANDARD DEDUCTION.
18. HOMEBUYER CREDIT. ANYONE WHO BUYS A HOME IN THE PERIOD FROM 04/09/08 TO 06/30/09, AND HAS NOT OWNED A HOME IN THE PRECEDING THREE YEARS, MAY GET A REFUNDABLE TAX CREDIT EQUAL TO THE LESSER OF $7,500 OR 10% OF THE HOME'S PURCHASE PRICE, ON HIS 2008 OR 2009 INCOME TAX RETURN. THERE IS NO CREDIT IF INCOME IS OVER $95,000 ($170,000 MFJ). THE CATCH IS THAT THE CREDIT MUST BE REPAID TO THE GOVERNMENT RATABLY OVER 15 YEARS. NO INTEREST WILL BE CHARGED ON THIS LOAN / CREDIT. ****** FEB 2009 TAX LAW CHANGE: THE HOMEBUYER CREDIT HAS BEEN GREATLY ENHANCED FOR HOMES BOUGHT IN THE PERIOD FROM JAN 1, 2009 TO NOVEMBER 30, 2009 (LATER EXTENDED TO APRIL 30, 2010) THE MAXIMUM CREDIT HAS BEEN INCREASED TO $8000 AND NEED NOT BE REPAID--BUT THE TAXPAYER MUST USE THE HOME AS HIS PRINCIPAL RESIDENCE FOR THREE YEARS. THIS ENHANCED CREDIT MAY BE TAKEN ON EITHER THE 2008 OR 2009 TAX RETURNS. ********NOV 2009 TAX LAW CHANGE: TAXPAYERS WHO HAVE LIVED IN THEIR HOMES FOR FIVE CONSECUTIVE YEARS OUT OF THE PREVIOUS EIGHT ARE ALSO ELIGIBLE FOR THE HOMEOWNER CREDIT IF, DURING THE PERIOD FROM NOVEMBER 7, 2009 TO APRIL 30, 2010, THEY BUY ANOTHER HOUSE TO USE AS THEIR PRINCIPAL RESIDENCE. THIS MIGHT APPLY TO RETIREES DOWNSIZING TO A SMALLER HOUSE OR YOUNGER PEOPLE UPSIZING BECAUSE OF A GROWING FAMILY.
19. RESIDENTIAL ENERGY CREDIT FOR EXTERIOR DOORS AND WINDOWS, INSULATION, AND ENERGY-EFFICIENT CENTRAL AIR CONDITIONERS AND HOT WATER HEATERS. OTHER CATEGORIES MAY QUALIFY-- ASK THE MERCHANT OR CONTRACTOR.
20. SALES TAX PAID ON A NEW MOTOR VEHICLE OR MOTOR HOME PURCHASED DURING THE PERIOD FROM FEBRUARY 17, 2009 TO DECEMBER 31, 2009.
21. MAKING WORK PAY AND GOVERNMENT RETIREE CREDITS.

MINIMUM NEEDED $11400 MFJ, $5700 S, OR $8350 HH. BE AWARE THAT ONLY THE AMOUNTS EXCEEDING THESE STANDARD DEDUCTION FIGURES WILL REDUCE TAXABLE INCOME AND THUS THE TAX BECAUSE YOU GET THE STANDARD DEDUCTION REGARDLESS.
1. AD VALOREM PART OF VEHICLE LICENSE PLATE FEES.
2. REAL ESTATE TAXES (PROPERTY TAXES).
3. STATE AND LOCAL INCOME TAXES PAID BY CHECK OR WITHHELD FROM PAYCHECK IN 2009. IF YOU MADE A MAJOR PURCHASE SUCH AS A VEHICLE OR BOAT, TELL US WHAT THE SALES TAX WAS--AS THIS MAY RESULT IN A BIGGER DEDUCTION.
4. MEDICAL EXPENSES NOT REIMBURSED BY INSURANCE--HOSPITAL, DOCTOR, DENTIST, NURSE, CHIROPRACTOR, PHYSICAL THERAPIST, PSYCHOLOGIST, LAB FEES, PRESCRIPTION DRUGS, INSULIN, EYEGLASSES, CONTACT LENS AND SOLUTIONS, HEARING AID, DENTURES, CRUTCHES, WHEELCHAIR, AMBULANCE, TRANSPORTATION (ESTIMATE ROUND-TRIP MILEAGE--24 CENTS PER MILE), LODGING, HEALTH/ DENTAL/ CANCER/ LONG-TERM CARE INSURANCE PREMIUMS, NURSING HOME (IF A PRINCIPAL REASON FOR RESIDENCE IS THE AVAILABILITY OF MEDICAL CARE), ETC. A PORTION OF THE PAY OF A HOUSEKEEPER HELPING AN INVALID AT THE INVALID'S HOME IS DEDUCTIBLE IF IT INVOLVES BATHING AND DRESSING WOUNDS, CHANGING PADS, ADMINISTERING MEDICINE, AND SEEING AS TO PROPER NUTRITION.
5. INTEREST ON DEBT--MORTGAGE OR HOME EQUITY LOANS, INVESTMENT LOANS, AND LOAN ORIGINATION FEES OR "POINTS" (POINTS PAID ON A SIMPLE REFINANCING MUST BE DEDUCTED OVER LIFE OF NEW LOAN). INTEREST PAID ON SECOND HOMES IS ALSO DEDUCTIBLE. A BOAT MAY QUALIFY AS A SECOND HOME IF IT HAS COOKING, SLEEPING, AND TOILET FACILITIES.
6. CASUALTY LOSSES--STORM, FIRE, THEFT, COLLISION, FLOOD, VANDALISM, ETC. LOSS MUST EXCEED 10% OF INCOME.
7. CHARITABLE DONATIONS IN MONEY OR GOODS--CHURCH, UNITED WAY, SALVATION ARMY, GOODWILL, HOMES OF GRACE, OUT OF POCKET EXPENSES AND 14 CENTS PER MILE FOR VOLUNTEER WORK (CHURCH CHOIR, SCOUTS, RED CROSS). NON-MONETARY DONATIONS LIKE OLD CLOTHES MUST BE IN GOOD CONDITION. CONGRESS HAS DECLARED THAT LOOSE CHANGE IN THE CHURCH PLATE IS NO LONGER DEDUCTIBLE WITHOUT A RECEIPT.
8. UNREIMBURSED EMPLOYEE EXPENSES WHILE OUT OF TOWN INCLUDING TRAVEL, LOCAL TRANSPORTATION, MEALS AND LODGING, LAUNDRY, AND TELEPHONE. AN OUT-OF-TOWN TEMPORARY JOB SITE IS CONSIDERED INDEFINITE, AND THUS NONDEDUCTIBLE IF THE JOB LASTS ONE YEAR OR MORE.
9. UNREIMBURSED EMPLOYEE TRANSPORTATION EXPENSES IN HOME AREA INCLUDING WORK AT TEMPORARY JOB SITES (IF YOU HAVE A REGULAR WORKPLACE). YOU MAY COUNT COMMUTING FROM HOME TO TEMPORARY JOB SITES BUT NOT TO REGULAR WORKPLACE. TAKE BUSINESS PERCENTAGE OF ACTUAL VEHICLE EXPENSES OR 55 CENTS PER MILE.
10. JOB-HUNTING EXPENSES (IF IN SAME TRADE OR BUSINESS). LOCAL MILEAGE AND TRAVEL AWAY FROM HOME. PLEASE ESTIMATE MILEAGE (55 CENTS PER MILE). EMPLOYMENT AGENCY, RESUME TYPING, POSTAGE, LONG DISTANCE CALLS.
11. UNION AND PROFESSIONAL DUES AND TRADE MAGAZINES, UNIFORMS, SAFETY EQUIPMENT, TOOLS AND SUPPLIES USED ON JOB, LICENSES, MALPRACTICE INSURANCE, REQUIRED PHYSICAL EXAMS, BUSINESS ENTERTAINMENT.
12. EXPENSES FOR EDUCATION OR TRAINING TO MAINTAIN OR IMPROVE SKILLS IN YOUR PRESENT OCCUPATION OR WHICH IS REQUIRED BY YOUR EMPLOYER. COMMUTING TO THE EDUCATION SITE IS DEDUCTIBLE IF THE TRAINING IS SHORT-TERM.
13. LEGAL AND OTHER PROFESSIONAL FEES FOR INVESTMENTS OR FOR PROTECTION OF INCOME. TAX PREPARATION FEE, CASUALTY LOSS APPRAISAL, SAFE DEPOSIT BOX, IRA CUSTODIAL FEES, OTHER INVESTOR EXPENSES.
14. BUSINESS/ EMPLOYEE TELEPHONE CALLS--LONG DISTANCE, WORK-RELATED PORTION OF CELLULAR PHONE. BASIC HOME SERVICE IS NOT DEDUCTIBLE.
15. GAMBLING LOSSES, BUT ONLY TO EXTENT OF WINNINGS.

TAX TIPS AND ADVICE
TAXPAYERS NO LONGER HAVE TO BUY A NEW RESIDENCE TO AVOID BEING TAXED ON THE SALE OF OLD RESIDENCE. IF THEY LIVED IN THE OLD HOUSE FOR TWO OF THE PREVIOUS FIVE YEARS, IN MOST CASES THE SALE NEED NOT BE REPORTED, WHETHER A GAIN OR LOSS.
ALWAYS MAIL IN YOUR TAX RETURN OR AN EXTENSION BY APRIL 15 EVEN IF YOU CANNOT PAY THE TAX DUE.
IF YOU GAMBLE, KEEP RECORDS OF ALL WINNINGS AND LOSSES. IF YOU RECEIVE A W-2G ON YOUR WINNINGS, YOU WILL WANT TO HAVE PROOF OF YOUR LOSSES IN CASE OF AUDIT.
YOUR DEPENDENT CHILD WITH ONLY W-2 OR INTEREST/ DIVIDEND INCOME MUST FILE A TAX RETURN IF HE EARNED OVER $300 OF INTEREST OR DIVIDENDS AND HIS TOTAL INCOME IS MORE THAN $950. IF TOTAL W-2/ INTEREST/ DIVIDEND IS MORE THAN $5700, A RETURN MUST ALSO BE FILED.
DO NOT PAY A BALANCE DUE NOTICE FROM IRS OR CASH A REFUND CHECK FROM IRS IF YOU DON'T UNDERSTAND THE REASON IT WAS SENT. CALL MCDONNELL ACCOUNTING.
KEEP TAX RETURNS FOREVER; KEEP SUPPORTING DOCUMENTS 7 YEARS.
ALWAYS STRIVE TO MAKE YOUR VOLUNTARY PRETAX CONTRIBUTIONS TO YOUR PENSION PLAN AT WORK, AT LEAST TO THE POINT TO WHICH YOUR EMPLOYER MATCHES YOUR CONTRIBUTION. ON THE OTHER HAND, IF YOU LEAVE YOUR JOB AND MUST WITHDRAW YOUR PENSION FUNDS, ROLL THEM INTO AN IRA WITHIN 60 DAYS TO AVOID 10% PENALTY AND BEING TAXED IN YOUR HIGHEST BRACKET (SEE FIRST PAGE). AVOID INCOME TAX WITHHOLDING ON THE ROLLOVER BY HAVING A TRUSTEE TO TRUSTEE TRANSFER. DO NOT HANDLE THE MONEY YOURSELF.
IF YOU DEDUCT VEHICLE EXPENSES FOR YOUR BUSINESS OR AS AN EMPLOYEE, KEEP RECEIPTS VERIFYING THESE EXPENSES AND KEEP A LOG OF EACH LOCAL AND OUT-OF-TOWN BUSINESS TRIP (MILEAGE, DATES, DESTINATIONS, BUSINESS PURPOSE). MANY OF OUR CLIENTS HAVE VERY LARGE DEDUCTIONS IN THIS CATEGORY, AND THEY'RE TAKING A BIG RISK IN NOT KEEPING TRACK OF THEIR MILEAGE (IN THE EVENT OF AN IRS AUDIT).
IF YOU HAVE LOST RECEIPTS FOR DEDUCTIONS OR CREDITS, CAREFULLY RECONSTRUCT FIGURES AND OTHER DETAILS FROM MEMORY AND WRITE THEM DOWN.
THE ABOVE LISTS OF DEDUCTIONS AND CREDITS ARE NOT ALL-INCLUSIVE. DO NOT HESITATE TO CALL US ABOUT ANY OTHER EXPENSES YOU THINK MAY BE DEDUCTIBLE.