Saturday, October 19, 2013

Review Your Investments Before Year End


This is a good time of year to review your investments. If you’re not meeting your financial goals for the year, there’s still time to make changes. Make sure your portfolio is appropriately balanced among stocks, bonds, and other investments. Keep it well diversified, without too much at risk in any one sector. And you’ll want to weed out investments with poor future prospects.
As you identify investments to buy and sell, keep the following tax implications in mind:
·  When you sell assets, you’ll have a capital gain or loss. Remember that capital gains on assets held for more than 12 months enjoy lower tax rates. For shorter holding periods, you’ll pay tax at ordinary income rates.
·  Don’t forget to include any reinvested dividends when you calculate your cost basis for mutual fund shares.
·  You can use capital losses to offset capital gains. Excess capital losses can even offset a limited amount of ordinary income.
·  Watch out for the “wash sale rule.” If you sell stock and then reacquire substantially identical securities within 30 days of a sale, you can’t deduct a loss from the sale.
·  The law passed in January of this year sets the tax rate on long-term capital gains and qualified dividends at 20% for taxpayers in the 39.6% ordinary income bracket. Taxpayers in the two lowest ordinary income rates (10% and 15%) will have a 0% rate on capital gains and dividends. Those in all other brackets will continue to have a 15% rate on dividends and long-term capital gains.
·  Changing investments within a tax-sheltered retirement account doesn’t have any immediate tax consequences. You’ll pay tax at ordinary income rates when you take distributions.
Remember, taxes shouldn’t drive your investment decisions, but they are an important factor to consider. If you need assistance, give us a call.

Call us at (219) 769-3616 with your questions, or email them to

Friday, October 4, 2013

Lake County Income Tax Update

Lake County Income Tax Update


Lake County has adopted a county income tax.  The tax will go into effect October 1, 2013 at a resident rate of 1.5% and a nonresident rate of   0.25%  0.50%.  

Please note that the previously published Lake County non-resident county income tax was incorrectly posted on the Indiana Department of Revenue’s website and the frequently asked questions notice. 

The resident rate was correctly published at 1.5%; however, the non-resident rate should be 0.5%. 

Please make sure you update your payroll software or contact your payroll processing company to make sure any changes that need to be done are timely completed.

Call us at (219) 769-3616 with your questions, or email them to

Friday, September 20, 2013

A Bank Line of Credit: When does it make sense to use one?

Just exactly what is a bank line of credit and who should be using one? A bank line of credit is not a great deal different from a credit card. You make draws against your line of credit from time to time as you need cash. You pay interest only on the amount of the loan balance outstanding. You are expected to make payments and occasionally bring your outstanding balance to zero. Let’s look at an example. 

Let’s say that your bank has arranged for you to have a $100,000 line of credit. You are not obligated to draw any of it at any given time, and you will pay no interest until you actually make a draw (much as you do with a credit card). 

Assume that you want to build up your inventory for the holiday shopping season and need $30,000 to do so. After your inventory purchase, you still have $70,000 available even if the $30,000 is still outstanding, but you are only paying interest on the $30,000. You may have several occasions during the year to borrow on your line of credit. Since your line of credit is intended for short-term cash needs, your banker expects your balance to be paid down as your cash flow improves. 

Do not use a line of credit for capital purchases. If you need to expand your building or buy new equipment, arrange a term loan for that specific acquisition. You should not use a credit card for such an investment, and you should not use your line of credit for that either. 

If your business has at least two years of making a profit, you may well qualify for a bank line of credit. Start by checking with your current bank. Your banker would like to keep your business, and if your financial statements support it, you will most likely be offered a loan. Lines of credit for small amounts may not require collateral. On larger loans, you may need to put up collateral, and you may need a co-signer. 

A bank line of credit can make your operation more efficient. There is comfort in knowing that you have a reliable source of instant cash for your short-term needs. 

Most banks are willing to make loans to businesses that have uneven income cycles. You may want to shop around for the best loan terms. Some banks may already have several customers in your industry and do not want more (perhaps a bank examiner’s concern). Accordingly, their terms may be less favorable than some other bank or credit union. 

Please contact us if you would like assistance in preparing a request for a bank line of credit.

Call us at (219) 769-3616 with your questions, or email them to

2013 Rules on Medical Expenses and Taxes

The 2010 law on health care reform included some changes on medical expenses and taxes that go into effect this year.
First, the amount that you can contribute to a health flexible spending account (FSA) is now limited to $2,500 a year. The limit will be adjusted annually for inflation.
Next, there’s a change in the threshold for deducting unreimbursed medical expenses. For those under the age of 65, the prior threshold was 7.5% of adjusted gross income. Now only unreimbursed medical expenses exceeding 10% of a taxpayer’s adjusted gross income are deductible. Taxpayers who are 65 and older may continue to take an itemized deduction for medical expenses exceeding 7.5% of adjusted gross income through the year 2016.
The IRS issued “Seven Important Tax Facts About Medical and Dental Expenses” reminding taxpayers of the rules governing deductibility of costs not reimbursed by insurance.
Not only is the deduction for medical and dental expenses limited by the 10% adjusted gross income threshold, taxpayers must itemize deductions to benefit. No expenses can be claimed where the standard deduction is taken.
Qualifying expenses include most medical and dental costs paid for the taxpayer and his or her spouse and dependents. Prescription drugs and insulin qualify, and the cost of medical, dental, and some long-term care insurance also qualifies. The cost of travel to obtain medical care qualifies, including the cost of public transportation or an ambulance, plus tolls and parking fees. If a car is used for medical travel, a standard mileage rate of 24 cents a mile is deductible.
Since using funds from health savings accounts or flexible spending arrangements to pay for medical expenses is usually tax-free, no deduction is allowed for expenses paid with funds from these plans.
If you need details about the current rules on deducting medical expenses, contact our office. 

Call us at (219) 769-3616 with your questions, or email them to

Wednesday, August 21, 2013

Lake County Indiana Income Tax

Lake County Indiana Local Option Income Tax
(County Tax)
Effective October 1, 2013 

Lake County, Indiana, has adopted a county income tax.  The tax will go into effect October 1, 2013 at a resident rate of 1.5% and a nonresident rate of .25%.  

For additional information, the Indiana Department of Revenue has provided frequently asked questions and the corresponding answers on their website. The frequently asked questions and answers can be found at

Please make sure you update your payroll software or contact your payroll processing company to make sure any changes that need to be done are timely completed. 

Call us at (219) 769-3616 with your questions, or email them to

Thursday, August 15, 2013

Bogus IRS Emails

Bogus IRS Emails

The IRS reports that fraudulent e-mails purporting to be from the IRS are still running rampant. Here is what you need to know to protect yourself.

The typical scam starts with an e-mail message, complete with IRS logo and official-looking format, asking for information to fix a problem with your tax return. Scam artists, who are no dummies when it comes to IRS rules and lingo, will try to obtain your social security number, bank log-in information, or other personal data. With these items, they might re-direct your refund to themselves, access your bank account, or file a bogus tax return in your name and fraudulently claim a refund. And spotting a fake IRS notice is not as easy as it sounds. Scams such as these utilize sophisticated techniques and seemingly authentic tax forms to steal from people of all levels of financial sophistication.

But for all this trickery, protecting yourself is fairly simple. Don’t respond to any unexpected IRS e-mail. Ever. IRS agents will never initiate taxpayer contact by e-mail, and neither will they ask for your bank account password or ID number. Also, never click on any link or attachment until you know for a fact that it is from the IRS. If in doubt, you can call the IRS at 1-800-829-1040 or forward the e-mail to

You should also be on your guard against fake phone calls from the IRS. Don’t immediately accept that the caller is legitimate, and certainly don’t divulge personal information to the caller. Our best advice for any IRS-initiated contact is to call our office before you do anything. We can quickly determine if the problem is for real, and if it is, help you respond appropriately.

Call us at (219) 769-3616 with your questions, or email them to

Tuesday, July 30, 2013

What You Need to Know About Business Vehicle Expenses

You plot the fastest route to your client’s office with an on-board navigation system. You use a hands-free cell phone to leave last-minute instructions for your staff on the way to the meeting. Your computer, presentation materials, and an extra shirt are in the back seat. In short, your vehicle is your office on wheels.

It’s also a tax deduction.

Here’s what you need to know to reap the benefits.

Overview: You can deduct auto expenses when you own or lease a vehicle and use it for business. Deliveries to customers, traveling to business meetings, and trips to the office supply store qualify as business use. Commuting generally doesn’t, even if you discuss work on your phone while stuck in traffic.

The rules: You have two alternatives for calculating the deduction: actual costs or the standard mileage rate. If you choose standard mileage in the first year you use a vehicle you own for business, you can usually switch to actual costs in later years. Choosing standard mileage for a leased vehicle locks you in to that method for the term of the lease.

What’s deductible? Under the actual cost method, deductible costs include depreciation, maintenance, gasoline, taxes, insurance, parking fees, and interest expense.

The standard mileage rate for business use during 2013 is 56.5¢ per mile. In addition, you can deduct the business portion of parking fees, tolls, certain taxes, and, if you’re self-employed, interest on your vehicle loan.

How to benefit: Maintain a log of business and personal mileage and keep receipts. Having both lets you pick the method that generates the largest tax deduction.

Call us if you would like additional information on taxes and business driving.


Call us at (219) 769-3616 with your questions, or email them to

Friday, July 12, 2013

Identity Theft is a Business Problem, Too

Businesses sometimes adopt a head-in-the-sand attitude when it comes to identity theft. That's good news for thieves. By stealing the average consumer's credit card data, a thief can run up a sizeable bill at a department store or online auction. But if the crook absconds with corporate files, a treasure trove of sensitive information (from vendors, customers, and employees) can be his for the taking.

Say you operate a local video store. In the process of signing up new members, you collect sensitive information such as credit card numbers and home addresses. One night a tech-savvy thief breaks in and steals the store's computers, thereby gaining access to all customer data you've collected. When the spending spree begins (and it will) and your customers learn of this security breach (and they will), your business reputation is headed for a nose dive.

To reduce the risk of identity theft at your company, consider the following:

· If you don't need it, don't collect it. The more sensitive information that's sitting in your filing cabinets or on your computer, the more risk you run. So don't ask for a customer's social security number and home address if all you really need is a name and phone number.

· Limit access. Staff should only be allowed to view information that's needed for their particular duties. The maintenance guy probably doesn't need to know about client health records. Perhaps the receptionist can remain ignorant about supplier identification numbers.

· Who's asking? Thieves often get sensitive information from eager-to-help staff who fall for believable stories. "Miss, my mother is in the hospital and she really needs this information for proof of insurance." When you or your staff get a seemingly legitimate request, be sure to follow up. Call the hospital directly before sharing information.

Identity theft is not just a problem for your clients; it's a business threat as well.

Call us at (219) 769-3616 with your questions, or email them to

Friday, June 28, 2013

Energy Tax Credits Still Available to Savvy Taxpayers

Generous tax credits resulting from energy-saving purchases are still available to taxpayers, even after the so-called fiscal cliff legislation passed earlier this year.
On the low end of the spectrum, homeowners can receive a tax credit equal to 10% of the cost to upgrade their windows, doors, and other energy efficient household items. On a grander scale, you can receive a credit for major purchases such as air conditioners, furnaces, biomass stoves, and special metal roofs. The maximum lifetime credit is generally $500, but some items are capped at a lower amount. For instance, windows are maxed out at $200 and furnaces at $150. Air conditioners limit out at $300.
Businesses can also get in the energy tax credit game. Some of the tax perks available include credits for constructing wind, biofuel, or ethanol facilities, as well special vehicle refueling stations and highly efficient appliances. The IRS’s qualifications for these big-ticket items are very specific, so you would be smart to consult a tax professional before launching such a project.
But large-scale energy upgrades aren’t limited to just businesses. Individuals can receive a credit of 30% of the cost to upgrade their home with a qualified geothermal heat pump, solar electricity generator, or wind harnessing device. Eligible costs can include labor and site preparation in addition to the equipment. What’s more, the credit for these types of projects is available for vacation homes too. And there is no lifetime limit, so the bigger project, the bigger the saving. Again, check all the rules to qualify.
Recordkeeping plays an important role in claiming these tax credits, so be sure to obtain all manufacturer certifications for the equipment you buy and keep all records of expenditures made. If an energy-saving project is on your mind, contact our office for the latest rules.

Call us at (219) 769-3616 with your questions, or email them to

Tuesday, June 18, 2013

Health Insurance Marketplace Notices

The Affordable Care Act states that an employer must provide a written notice regarding the Health Insurance Marketplace to each existing employee and new hires. 

Employers Subject to the Notice Requirement

Most employers will be subject to this requirement as it applies to employers covered by the Fair Labor Standards Act (FLSA).  In general, the FLSA applies to employers that have
1)      one or more employees who are engaged in commerce and
2)      gross annual sales of $500,000 or more 
Providing Notice to Employees

Employers must provide a notice of coverage options to each employee, regardless of plan enrollment status or of part-time or full-time status. 

Content of the Notice

The notice should have the following information:
1)      Inform the employee about the Health Insurance Marketplace (Exchange), including a description of the services and contact information.
2)      Inform the employee that they may be eligible for a premium tax credit and further describes the qualifications.
3)      Inform the employee that if they purchase a qualified health plan through the Exchange, they may lose the employer contribution (if any) to any health plans offered by the employer, and that all or portion of such contribution may be excludable from income for federal income tax purposes.
The Department of Labor has provided a model notice for employers who offer a health insurance plan to some or all employees, as well as a model notice for employers who do not offer a health plan.  The model notices can be found at 

Timing and Delivery of the Notice

The notices have to be given to existing employees no later than October 1, 2013.
Starting as of October 1, 2013, the notices have to be given to new employees on the day they are hired. 
Call us at (219) 769-3616 with your questions, or email them to

Monday, May 20, 2013


There were over 10 million cases of stolen identity reported this past year, and the business of identity theft is on the rise.

One of the most popular and successful forms of theft is the use of fake charities. Don’t be taken in by fake charities. If you are duped into contributing, you may have given more than just money to the scam artists. You may have given them enough of your personal financial information to allow them to steal your identity.

Once the thief has your identity (name, address, phone number, account numbers, security codes, etc.), he or she is free to set up new accounts and make purchases in your name. Such activity can be financially devastating to you, and it could take months to straighten the problem out.

How does one keep from becoming a victim? Be especially cautious of those who contact you by telephone or e-mail. You could receive an e-mail from a charity with a name you think you recognize. Many scam artists are very clever at making up names that make you feel you might already know them. Their causes always sound good, such as save the whales, help poor kids in Africa, help abused animals. Once they have hit your hot button and you reply, they are on the road to easy money.

Here is an example of what might take place. Let’s say you get an e-mail from “Doctors Across Africa” which you mistake for the legitimate “Doctors Without Borders.” The e-mail does a good job of convincing you that this charity assists thousands who would have no medical help except for generous people such as you. The e-mail has a link to their Internet site which looks very professional and official. It may contain photos of all the excellent work being done by these non-existent doctors. But most important, the site will ask you for your credit card number, maybe even the three-digit security code, and your name and mailing address so they can mail you a receipt for your tax deduction. You can be sure that by the time you push the “Submit” button, you will have given them all they need to steal your identity.
Stay alert for charity scams, or your desire to help just might result in having your identity stolen.
Call us at (219) 769-3616 with your questions, or email them to







Friday, May 3, 2013

The New Estate Tax Rules Bring Calm After the Storm


Some individuals were in a panic late last year as the favorable estate and gift tax rules were set to expire in 2013. With Congressional action uncertain, no one knew how their plans might be affected. 

To the relief of taxpayers and planners, most of the estate rules changed only slightly. The estate and gift tax exemptions will be $5,250,000 in 2013, up from $5,120,000 last year, and adjusted for inflation going forward. The top tax rate for estates and gifts exceeding these amounts will be 40%, up from 35% last year, but better than the 55% rate that would have been the law had Congress not acted. And a surviving spouse will still be able to access the unused portion of the estate exemption of the deceased husband or wife 

It’s important to note that the exemption applies to both inheritances and lifetime gifts. The cumulative combined “transfer” exemption will be $5,250,000 whether the money is given away before or after you die. In addition, you can give away up to $14,000 annually to as many recipients as you like without tapping into your lifetime transfer tax exemption 
Average folks with estates far under $5 million might wonder how any of this applies to them. But the reality is that everyone needs an estate plan. The backbone of your estate plan, a will, is an essential legal tool intended to ensure that your final wishes are honored. A will can also indicate who will take care of your children should you pass away, and how the children can access their inheritance. If you want to include your favorite charity in your estate plans, there are strategies available to benefit both family and charity alike. 

Estate planners might be breathing a sigh of relief, but don’t let the current rules lull you into complacency. Contact us and your attorney for a review of your estate plan today.

Call us at (219) 769-3616 with your questions, or email them to

Tuesday, April 30, 2013

Managing Your Business

Regardless of the type of business you’re running – whether it’s selling electronics, making furniture, or servicing automobiles – monitoring a few key financial indicators is often all that’s needed to keep your company growing and prosperous. On the other hand, neglecting a company’s vital signs can lead to management by crisis and corrective action that’s too little, too late.


A prudent business owner won’t wait until the end of the year (or even the end of the quarter) to learn that revenues are declining, inventories are shrinking, or payroll expenses are spiraling out of control. Although annual financial statements provide historical perspective and a wealth of data for long-term planning, correcting current problems is a matter of timely insight and informed analysis. You want to know whether your business is losing money or growing – now, not later.


A company’s key financial indicators often fall into one or more of the following categories:


* Orders and returns. Are you selling more units over time? To find out, look at your sales figures by units. Tracking revenues alone may present a false picture. After all, revenues may be growing because prices have increased. If unit sales are declining, you might be losing market share. Are customers returning more and more of your products? Are complaints increasing? If so, it may be time to examine your quality control process or return policy.


* Breakeven point:  If you need $100,000 this month to cover fixed and variable costs, are you selling enough products or providing enough services to break even? If you’re dipping into reserves to cover revenue shortfalls, adjustments may be required. Expenses may need to be slashed, a new advertising campaign launched, or a new and cheaper supplier procured.


* Liquidity:  Knowing the availability of cash is vital to every business. That’s why reconciling the company’s bank statements shouldn’t be an afterthought. Every month your accountant or bookkeeper should ensure that your general ledger agrees with the bank’s records of deposits and withdrawals. If a company is “bleeding cash,” the bank statements should tell the story.


* Inventory:  Controlling the stuff that’s weighing down your retail shelves or accumulating in your warehouse is often a key to profitability. Buying too many items may lead to excessive storage costs; buying too little may lead to burgeoning backorders and lost sales.


* Payroll:  Staff size should be commensurate with revenues. Medium-sized companies, especially, can find that labor expenses grow too rapidly. A decline in orders may signal a need to reduce payroll costs.


By carefully analyzing your business’s operations, you’ll be able to identify the indicators that provide the clearest view of your company’s ongoing profitability.


Over time your business’s key numbers may change. The key is to know your company, identify changing conditions, and adapt. A brief but timely report that presents the numbers that really matter will help to keep your company on the right track.

Call us at (219) 769-3616 with your questions, or email them to

Health Care Reform Changes Effective in 2013

A number of provisions in the 2010 health care reform legislation go into effect this year. Here are some of the changes that could affect you.


Medical expense itemized deduction. The 7.5% income threshold for deducting unreimbursed medical expenses increases to 10% for taxpayers under age 65. Those 65 and older may continue to use the 7.5% threshold through the year 2016.


FSA contributions. The limit on contributions to health care flexible spending accounts (FSAs) is lowered to $2,500.


Medicare tax on earned income. A 0.9% Medicare surtax will be imposed on wages and self-employment income exceeding $200,000 for singles and $250,000 for married taxpayers filing a joint return.


New Medicare tax on unearned income. A new 3.8% Medicare tax will be imposed on unearned income (investment income such as interest, dividends, and capital gains) for single taxpayers with adjusted gross income exceeding $200,000 and for couples with adjusted gross income exceeding $250,000.


These changes may affect your 2013 withholding or quarterly estimated tax payments. Take the changes into account as you do your 2013 tax planning. For more information and planning assistance, contact our office.




Call us at (219) 769-3616 with your questions, or email them to