Notice of Mergerof CPA Firms

In lieu of retirement, Duane Moats, CPA has decided to merge DR Moats and Company with D. David Hebebrand CPA. The new firm will be Moats & Hebebrand CPAs and will be located at 212 West F Street (where Duane Moats has maintained his CPA practice since 2000). David Hebebrand has been a licensed CPA for 29 years, has lived in Tehachapi for 11 years, and recently sold his CPA practice in Porterville, Calif. as he was tired of the 90-mile-one-way drive to Porterville. Duane is looking to reduce his work load and Dave is looking for additional tax and accounting work to fill the void left by selling his Porterville CPA practice. This merger will allow Duane to gradually withdraw from his practice over the next several years and pursue other interests, while ensuring that his office can still provide the competent, caring and confidential service you have come to expect. Duane will still be working in the 212 West F Street office on a reduced schedule during tax seasons (and by appointment at other times during the year) and Virginia Ferrari, EA will still be providing her excellent bookkeeping, payroll and tax preparation services to our clients. Dave Hebebrand, CPA is anxious to meet you, and will be assuming some of the accounting and tax work previously handled by Duane. We look forward to a good tax season, and to continuing to assist you as we have in the past.

6 Tax Breaks extended for 2014 tax returns

In late December 2014 Congress finally passed a tax bill which made the following tax breaks (scheduled to expire 12-31-2013) deductible on your 2014 tax returns:

• Primary and secondary school

teacher’s deduction of up to $250 of unreimbursed teaching expenses without having to itemize deductions.

• The ability to deduct the higher of

state and local taxes paid, or state sales tax paid, if you itemized deductions.

• Deduction of mortgage insurance

premiums reported on Form 1098.

• Forgiveness of up to $2 million of

home mortgage debt for short sales or foreclosures on your principal residence during 2014.

• Tax credits (10% of the cost) for

insulation, new water heaters, furnaces, central air conditioners, or wood pellet stoves for your existing main home. The maximum credit is $500, and is cumulative since 2006, so if you took a credit of $300 in 2012, you can only take an additional $200 credit in 2014.

• Deduct up to $4,000 in qualified education tuition and fees based on filing status and income levels.

2014 Tax Items You Need to Be Aware Of!

Affordable Care Act (ObamaCare) - 2014 is the first year you are required to report compliance with ObamaCare. The Internal Revenue Service has 5 new tax forms as part of your federal tax return. Some of you will receive a new Form 1095 (do not throw this away, we will need the information to prepare your 2014 federal tax return). See our article in the next issue of The Loop for more information on this topic.

Medical itemized deductions - For 2014 your medical expenses must now exceed 10% of your income (7.5% if you are over age 65). If you think your 2014 medical expenses exceed this threshold, take the time to assemble and add up your medical costs, otherwise there will be no benefit in adding up your medical expenses. If you are self-employed, deduct the amount you paid for medical insurance on the front page of your tax return (no percentage of income limits).

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 disclose it on your tax return. Failure to disclose this can result in severe penalties. The United States has agreements with foreign countries to require them to report foreign income to the IRS, to make sure you report the foreign income on your tax return.

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 2014 the IRS is requiring more 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.

In order to keep you informed watch our column in future issues of The Loop.