How long must I keep my records?

Per IRS Publication 583, you must keep your records that support an item of income or deduction on a tax return until the period of limitation runs out. The period of limitations is generally 3 years from the later of the due date of the return or the date you filed, whichever is later. There is a 6 year period of limitation if you do not report income that you should have reported and it is more than 25% of the gross income shown on the return. There is no period of limitations on an unfiled return or a fraudulent return.

Employment Taxes – If you have employees, you must keep all employment tax records for at least 4 years after the date the tax becomes due or is paid, whichever is later.

Assets-You must keep your records relating to property until the period of limitations expires for the year in which you dispose of the property in a taxable disposition. If you receive property in a nontaxable exchange, you must keep the records on the old property , as well as on the new property, until the period of limitation expires for the year in which you dispose of the new property in a taxable disposition.

What are the tax consequences of a “Reverse Mortgage”?

A reverse mortgage, per IRS Publication 17, is a loan where a lender pays you, in a lump sum , monthly advance, a line of credit, or a combination of all, while you continue to live in your home and retain title to your home. It is considered a loan advance, not income, and the amount you receive is not taxable. Any interest (including original issue discount) accrued on a reverse mortgage is not deductible until the loan is paid in full (subject to limits discussed in IRS Publication 936).

Based on your plan, your reverse mortgage becomes due when you move, sell your home, reach the end of a pre-selected loan period, or die.

What does the designation “CPA” represent and what is the benefit of working with a CPA vs. an accountant?

A CPA is a Certified Public Accountant who has a license issued by the State. A CPA designation is awarded based on meeting education requirements, passing a rigorous uniform examination, and meeting experience and ethics requirements. CPAs must maintain high ethical standards and must meet a high level of continuing education. A CPA can also represent a client before the IRS. An “accountant is not licensed by the State and is not required to meet any continuing education requirements and cannot practice before the IRS without becoming an “Enrolled Agent.”

What does the designation of CFP represent and how is it of benefit to me?

CFP® is a certification mark owned by the Certified Financial Planner Board of Standards Inc. (CFP Board), which can help you identify financial planners who are committed to competent and ethical behavior when providing financial planning. Individuals certified by the CFP Board have gone through the rigorous CFP® certification process that includes education, examination, experience and ethical requirements. Anyone can call themselves a financial planner, but only those that have fulfilled the certification and renewal requirements of the CFP Board can display the CFP® certification marks. Through the Code of Ethics, CFP® practitioners agree to act fairly and diligently when providing you with financial planning advice and services, putting your interests first.