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Bridgewater Certified Public Accountants, Inc.

Marin CPA Building Relationships One Client at a Time

Address: 1299 4th Street, Suite 500
San Rafael, CA 94901
Phone: 415-528-5400
Fax: 877-858-5577

5 Things You Should know about Required Minimum Distributions (RMD) from Retirement Accounts

Posted on Jul 26th @ 6:24 AM

5 Things You Should know about
Required Minimum Distributions (RMD) from Retirement Accounts

Required minimum distributions (RMDs) are amounts you are required to take from qualified
retirement plans and IRAs in order to avoid a 50% penalty on insufficient annual distributions.
Here are 5 things to know:

1. If you turned 70 1/2 in 2015, for example, you must take your first RMDs before the end of this
year unless you postpone it until April 1, 2016. However, postponement means taking two RMDs
in 2016 and that can adversely impact taxation of Social Security benefits in 2016 and result in
increased Medicare premiums for Parts B and D in 2018.

2. If you are still working, you can postpone your RMDs from company retirement plans until you
retire; this rule does not apply to IRAs.

3. RMDs for IRAs can be taken from one or more accounts. Total up all IRAs and then decide
from which one or more accounts to take the required distribution amount. This rule does not apply
to qualified retirement plans; separate RMDs are required from each type of retirement plan.

4. No lifetime distributions are required from Roth IRAs for the owner, but beneficiaries usually
must draw down the accounts over their lifetime (a special rule applies to spouses).

5. The penalty for insufficient withdrawals can be waived if you ask the IRS to do so. You must
explain why you failed to take RMDs and show that you remedied the situation as soon as you
discovered the insufficiency.

Grandparents can help with college costs

Posted on Jul 21st @ 10:34 AM

GRANDPARENTS CAN HELP WITH COLLEGE COSTS
Are you a grandparent who wants to help pay for a grandchild's college education? You'll find several ways to do this, each with its own limitations and tax consequences.

GIFTS. The simplest way is to make an outright cash gift to your grandchild each year. In 2014, you can give up to $14,000 without any gift tax liability. If your spouse joins in the gift, you can jointly give each grandchild up to $28,000 each year.

DIRECT PAYMENTS. You can give unlimited amounts without gift tax consequences if you make the payments directly to a qualified education institution on behalf of your grandchild. Payments can only be for tuition, not for dorm fees, meals, books, etc.

EDUCATION ACCOUNTS. You could set up a Coverdell education savings account or a Section 529 plan for your grandchild. These plans offer tax-free growth of amounts you contribute to them. Age, income, and contribution limits apply, however.

To discuss the options best suited to your circumstances, contact our office.415.528.5400

Report of Foreign Bank Accounts

Posted on Jun 13th @ 4:29 AM

Report of Foreign Bank Accounts

If you have a financial interest in or a signature authority over a foreign financial account including:

• Bank Accounts
• Brokerage Accounts
• Mutual Funds
• Accounts Combined Exceeding $10,000

Bank Secrecy Act may require you to report the account yearly to the IRS by filing Financial Crimes Enforcement paperwork.

Call us Today to file by the June 30th Deadline

Annual Penalties for late filing can be up to $10,000
Non Filing can incur 50% of account balance fines.

Don't Delay and Call us Today
415.528.5000

Your tax refund could be offset by debts

Posted on May 19th @ 3:22 AM

If you have unpaid obligations, such as overdue child support, state income tax, or student loans, part or all of your 2013 income tax refund may be redirected to pay the debt. The Treasury Department's Bureau of Fiscal Service runs the offset program, and it is this agency that will send you a notice if an offset occurs. The notice will list the original refund and offset amounts, plus the name and contact information of the agency that received the payment. For more details or assistance, contact our office.

Do You Owe Back Taxes

Posted on May 13th @ 2:41 PM

Back taxes are taxes that were not paid to the Internal Revenue Service in the time frame in which they were due. Most often, they were due to the IRS in a previous year. You can owe back taxes on a federal, state or even at a local level.
What happens if you owe back taxes?
Ignoring the problem is generally NOT a strategy that works, so we have outlined the process below for you and provided some potential solutions that could help.
1. Within 30 days of a missed payment, you will get a notice from the IRS requesting payment.
2. The IRS will follow-up with you on the order of once each month by mail until about six months have passed. Then the IRS will start calling you directly.
3. Penalties: Generally speaking, you are looking at some serious penalties if you have back taxes. The total late filing penalty is usually around 5% of the taxes you owe for each month (up to 5 months). If you paid part but not all of what is due to the IRS, you will receive a penalty for being late as well as interest on the current tax bill.
4. Liens: If you fail to pay your tax bill for years, you could face a tax lien — which is a legal claim to your property, even property obtained after the tax lien is put in place. Liens are very serious issues for taxpayers, as they significantly impact your credit score. Liens require significant time, effort and money to resolve.
What can you do to resolve these back taxes?
While the penalties for back taxes sound overwhelming and scary, it is important to understand that there are many options for those who owe the IRS back taxes. Hiring a tax firm to help you sort out your options is often a very wise move. Bridgewater has been communicating directly with the IRS on behalf of our clients for more than 15 years. We have experience negotiating solutions for our clients who are faced with back taxes. The IRS will often allow taxpayers to pay their back taxes in installments, which is very similar to credit card payments.
We can also explore additional options including requesting additional time to pay as well as offers in compromise, which allows a taxpayer to settle their debt with the IRS for less than the amount owed, should he/she be able to show that they are legitimately unable to pay the full amount. Bridgewater has experience with all types of negotiations with the IRS and has successfully managed this difficult problem for thousands of customers over the years. If you owe the IRS back taxes, give us a call today at 1-877-958-6638 and we can get to work for you. All you have to do is take the first step and contact our tax relief team. You do not have to do this alone - let us help solve this problem for you!

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