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A Supplement to The Abilene Reflector-Chronicle January 2014
A Readers Guide to Taxes, Investments,
Common Questions & Advice from experts
2 Tax and Investment Guide, January 2014 www.abilene-rc.com
BarrEtt tax and accOunting

P.O. BOx 323, 201 n. BuckEYE avE.
aBilEnE, kS 67410
PhOnE: 785.263.2228
E-mail: Barrtax@att.nEt
G. Randall BaRRett Over 20 Years Experience
Tim Horan Refector-Chronicle
Paul Brunson at the H&R Block offce on East 14th Street.
Tsunami maybe coming Jan. 31
Understanding
Affordable
Health Care Act
By PAUL BRUNSON
H&R Block
In the past few years, it
seems that every tax sea-
son has been different for
both the taxpayer and the
tax preparer. Congress and
the IRS continue to change
the rules each year, but
neither seems concerned
about how their actions im-
pact the average American
citizen.
Last year, Congress
didnt pass the tax laws
for 2012 until Jan. 2, 2013.
The result was a disaster
for both the IRS and tax
preparation companies to
implement in a matter of
weeks, while the taxpay-
ers had to wait to fle and
delayed the receipt of their
tax refunds by months in
some cases.
This year, the IRS has
blamed the three-week
government shutdown in
October 2013 for delay-
ing their programming
and testing for the new tax
season, even though the
changes were dramatically
fewer and there should have
been no last-minute delays.
However, the landscape is
set and now, Friday, Jan.
31, the IRS will begin re-
ceiving electronically fled
tax returns. Most software
preparation companies, in-
cluding H&R Block have
been open since Jan. 6 to
prepare tax returns and
then hold them at our host
until the IRS is ready to
receive them. Most people
and even employers have
delayed getting out their
W 2s and coming in to
have their taxes prepared
because they thought they
had to wait. The result is
going to be a tsunami of
taxpayers coming all at
once wanting to do their
taxes on or after Jan. 31.
The good news is that
once the IRS receives the
tax returns and begins to
process them, we should
not see any delays in get-
ting refunds out the door to
the taxpayer. After the IRS
acknowledges the receipt
of the tax return, the tax-
payer can expect to receive
their refund in eight to 23
days. After the initial rush,
the refunds will probably
be processed closer to the
shorter timeline.
The MAJOR change this
year that adds complex-
ity to the return process is
the implementation of the
Affordable Care Act (aka
Obamacare). Congress and
the Obama administration
passed this law several
years ago, but the impact
is just beginning to be felt
and it has become a part
of the tax return process.
Depending upon whether
the taxpayer and/or de-
pendents have adequate
health insurance as de-
fned by the new law, one
is REQUIRED to purchase
health insurance or be
charged a penalty, which
the administration defned
as a tax before the Supreme
Court. Since Congress has
the constitutional right to
tax, the Court determined
that the tax element over-
rode the issue of whether
the individual mandate to
require every person to
purchase health insurance
was constitutional.
While many dates and
deadlines are continuing to
be changed by the adminis-
tration that were defned in
the law, the current position
is that if anyone does NOT
have health insurance that
meets the ACA standard
by March 31, 2014, that
taxpayer will be required
to pay a tax when he/she
fles their 2014 tax return
by April 15, 2015. The
taxpayer will be paying
an additional tax as well
as their individual income
tax balance due or their
refund will be reduced by
the amount of the health
care tax. It is important to
understand that the tax will
be due and the individual
would still choose to have
NO health insurance cov-
erage. If, however, the
taxpayer goes into the fed-
eral or state exchange and
purchases health insurance
at a potentially subsidized
price by March 31, 2014,
they can avoid the tax pen-
alty.
Because of the prob-
lems with the healthcare.
gov website rollout, there
may be extensions on
these dates, but one cannot
count on the extra time. At
the present time, Kansas
has no state exchange and
Kansas taxpayers must use
the federal healthcare.gov
website.
While these issues have
added additional com-
plexities at tax time, H&R
Block staff is trained and
ready to help you through
your normal tax prepara-
tion as well as providing
you individualized guid-
ance in going through the
new minefeld of Obam-
acare. H&R Block has
found that a large percent-
age of taxpayers who at-
tempt to prepare their own
taxes make errors and, in
fact, leave over $1 billion
on the table. We encour-
age you to take advantage
of our expertise at H & R
Block and let us help you
get your part of the $1 bil-
lion back this year.
www.abilene-rc.com Tax and Investment Guide, January 2014 3
206 N.W. 2nd, Abilene, Kansas
785-263-3111
COOK REAL ESTATE COOK REAL ESTATE
Serving Abilene
& the Surrounding Area
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Realtor
Revisiting some basic investment strategies
BY PATTI OMALLEY-
WEINGARTNER
Benjamin F. Edwards & Co.,
Member SIPC
In light of the recent
market volatility, it seems
like a good time to review
some basic tenets of suc-
cessful investing:
Dollar Cost Averaging
If a person were to invest
the same fxed amount of
money every week, month
or year in a given stock or
mutual fund over time, a
phenomenal truth will soon
become evident: The aver-
age cost per share will be
less than the average price
per share. Given the nor-
mal historical volatility
of prices, i.e. their rise and
fall in prices, that set dollar
amount invested will buy
more shares when the price
is lower and fewer shares
when the price is higher.
If you are in the accumu-
lation stage of life, it is a
good practice to set aside a
certain percentage of your
earnings regularly (weekly,
monthly, quarter, etc.). You
can establish a periodic in-
vestment plan that would
automatically buy shares
of a stock or mutual fund
on a regular basis thus tak-
ing advantage of the bene-
ft of dollar cost averaging,
i.e. buying more shares
per dollar invested when
prices are lower, and buy-
ing fewer shares per dollar
when prices are higher.
However, dollar cost av-
eraging does not assure a
proft and does not protect
against losses in a declin-
ing market.
Dividend Reinvestment
Plans Under such a
plan, distributed dividends
would be used to buy ad-
ditional shares of the same
stock rather than be paid
out as cash. Many bro-
kerage companies have
such plans for which they
charge no commissions.
The more shares you
have, the more dividends
youll get. The more divi-
dends you get, the more
new shares you would buy.
This process would con-
tinue and there would be
ever more shares, paying
out ever more dividends,
purchasing even more
shares, etc. A sweet deal,
especially at times like
these when cash taken and
deposited in savings or
money market accounts
are paying historically
low rates on balances. A
program such as dividend
reinvestment is akin to
dollar cost averaging and
might make sense for long
term investors looking to
accumulate and grow their
assets or wealth. Keep in
mind that not all compa-
nies are paying dividends,
as companies are under no
obligation to do so.
Compounding Weve
all heard the answer to the
question, What would
one penny, a single cent,
be worth if it doubled ev-
ery day for a month? The
answer is $5,368,709.12!
And that is achieved
through the miracle of
compounding. Of course
there is no known invest-
ment that will double your
money every day, but there
is a simple formula for
determining how long it
would take to double your
money at a given rate of re-
turn: The Rule of 72. The
Rule of 72 simply states
that if you know the annual
percentage rate of return
you can earn, that number
divided into 72 will tell
you how long it would take
to double your money.
For example, if you
could earn 3 percent on a
certifcate of deposit, di-
viding that percentage, 3,
into 72, gives the answer
of 24 years. Conversely,
if you had a given amount
of money to invest and
wanted to know what rate
of return you would need
Tim Horan Refector-Chronicle
The staff at the Benjamin F. Edwards & Co., in the newly remodeled offce at the corner of Buckeye Ave. and Third Street (from
left) Brian Williams, Patricia OMalley-Weingartner, Donna Nanninga and Marcella Cobb.
Basic
trends
for successful
investing
See Basic, Page 7
Annuities
College Funding
Retirement Planning
Stocks & Options Strategies
Mutual Funds
IRAs & ROTH IRAs
Insurance Products
Tax-Managed investments
NO BANK GUARANTEE NOT FDIC INSURED MAY LOSE VALUE
Securities & Advisory Services offered through Investment Professionals, Inc.,
a Registered Broker Dealer & R.I.A. Member FINRA & SIPC



















112 North Main Hope, KS 67451
Tel 785-366-7225 Fax 785-366-7333
dan.cook@invpro.com
Dan Cook
Financial Consultant
Solomon
126 W. Main
(785) 655-2941
Abilene
501 N. Cedar
(785) 263-1332
Salina
605 Magnolia
(785) 827-3600
There is still time to fund
Your 2013 IRA
or Education Savings Account!
Call us today for details.
Tim Horan Refector-Chronicle
Bryce Koehn in the Edward Jones offce on North Broadway.
By BRYCE C. KOEHN
Edward Jones
You need to save and in-
vest as much as possible to
pay for the retirement life-
style youve envisioned.
But your retirement in-
come also depends, to a
certain degree, on how
your retirement funds are
taxed. And thats why you
may be interested in tax di-
versifcation.
To understand the con-
cept of tax diversifcation,
youll need to be familiar
with how two of the most
important retirement-sav-
ings vehicles an IRA
and a 401(k) are taxed.
Essentially, these accounts
can be classifed as either
traditional or Roth.
When you invest in a tradi-
tional IRA or 401(k), your
contributions may be tax
deductible and your earn-
ings can grow tax deferred.
With a Roth IRA or 401(k),
your contributions are not
deductible, but your dis-
tributions can potentially
be tax free, provided you
meet certain conditions.
(Keep in mind, though,
that to contribute to a Roth
IRA, you cant exceed des-
ignated income limits.
Also, not all employers
offer the Roth option for
401(k) plans.) Of course,
Use Tax diversifcation to help manage retirement income
tax free sounds better
than tax deferred, so you
might think that a Roth op-
tion is always going to be
preferable. But thats not
necessarily the case. If you
think your tax bracket will
be lower in retirement than
when you were working, a
traditional IRA or 401(k)
might be a better choice,
due to the cumulative tax
deductions you took at a
higher tax rate.
But if your tax bracket
will be the same, or higher,
during retirement, then the
value of tax-free distribu-
tions from a Roth IRA or
401(k) may outweigh the
benefts of the tax deduc-
tions youd get from a tra-
ditional IRA or 401(k). So
making the choice between
traditional and Roth
could be tricky. But heres
the good news: You dont
necessarily have to choose,
at least not with your IRA.
Thats because you may be
able to contribute to both a
traditional IRA and a Roth
IRA, assuming you meet
the Roths income guide-
lines.
This allows you to beneft
from both the tax deduc-
tions of the traditional IRA
and the potential tax-free
distributions of the Roth
IRA. And once you retire,
this tax diversifcation
can be especially valuable.
Why? Because when
you have money in differ-
ent types of accounts, you
gain fexibility in how you
structure your withdraw-
als and this fexibility
can help you potentially
increase the amount of
your after-tax disposable
income.
If you have a variety of
accounts, with different tax
treatments, you could de-
cide to frst make your re-
quired withdrawals (from a
traditional IRA and 401(k)
or other employer-spon-
sored plan), followed, in
order, by withdrawals from
your taxable investment
accounts, your tax-de-
ferred accounts and, fnal-
ly, your tax-free accounts.
Keep in mind, though, that
you may need to vary your
actual sequence of with-
drawals from year to year,
depending on your tax situ-
ation.
For example, it might
make sense to change the
order of withdrawals, or
take withdrawals from
multiple accounts, to help
reduce taxes and avoid
moving into a different tax
bracket.
Clearly, tax diversifca-
tion can be benefcial. So
after consulting with your
tax and fnancial advisors,
consider ways of allocat-
ing your retirement plan
contributions to provide
the fexibility you need
to maximize your income
during your retirement
years.
Edward Jones, its em-
ployees and fnancial advi-
sors cannot provide tax or
legal advice. You should
consult your attorney or
qualifed tax advisor re-
garding your situation.
Invest
now
to pay
for
retirement
4 Tax and Investment Guide, January 2014 www.abilene-rc.com
www.abilene-rc.com Tax and Investment Guide, January 2014 5
307 N Cedar (785) 263-1740 Abilene
DAvID E. BurrIs
Accounting Tax Preparation
Individual Corporate
Over 30 Years Experience
785-263-4080 208 NE 14th Street, Abilene, KS 67410
OBTP#B13696 2013 HRB Tax Group, Inc.
help + health = helpth
SM
Help understanding
health insurance.
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your taxes with H&R Block, our tax professionals can walk you
through a Tax and Health Care Review to help you understand
the full tax implications of your health care decision.
Its free. Its friendly. Its helpth
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. Make your appointment today.
By ANITA K. MILLER
Ameriprise Financial Services
Some investors wonder
if it makes sense for them
to invest in a company be-
cause they like the prod-
ucts or services it offers.
This question often stems
from their familiarity with
the famous investment
principle of legendary
fund manager Peter Lynch,
which is, Invest in what
you know.
The answer? It depends.
Although it can be fun
and interesting to track the
ups and downs of a com-
pany that makes or pro-
vides something you love,
its not necessarily wise
to put your money on the
line. Choosing where to
invest can be complicated
and when youre consider-
ing investing in a specifc
stock, there are several fac-
tors to consider.
First, its a good idea to
know whether the company
has solid fnancials, good
leadership and enough new
products or services on the
horizon to remain competi-
tive. Be prepared to invest
some time getting answers
to these questions because
it may involve looking at
analyst reports and com-
pany quarterly and annual
earnings releases.
It may be helpful to track
the stock youre consid-
ering for a period of time
to see how wildly it may
swing or if its fairly steady.
While it may match the ups
and downs of the S&P 500,
dig into any other factors
that might cause that spe-
cifc companys stock to
rise or fall. Perhaps one of
the supplies used to make
their most popular prod-
uct can be in short supply
based on agricultural pat-
terns or transportation bar-
riers. Be cautious if these
types of hiccups appear to
happen frequently and im-
pact the companys stock
negatively.
If the outcome of your re-
search is favorable, it still
doesnt mean the stock is
necessarily a good buy.
You should also know
where the companys stock
falls relative to future earn-
ings. For example, does it
appear to be low or high?
In addition, you should
assess whether or not that
stock is a good ft for your
overall portfolio. For ex-
ample, determine if this
particular stock will con-
tribute to the diversifca-
tion of your portfolio,
which may help you better
weather the markets ups
and downs. Diversifcation
involves having the right
blend of stocks, bonds,
mutual funds, and CDs to
help provide for more con-
sistent performance under
a wide range of economic
conditions.
As an alternative, you can
look at whether the compa-
nys stock is part of a well-
diversifed mutual fund,
which will give you some
ownership in the company
while helping to reduce
your risk exposure. Again,
you want to make sure that
the investment you select
is in line with your goals,
risk tolerance and time ho-
rizon.
Because of the amount
of time it can take to weed
though all this information
and the level of industry
knowledge required to un-
derstand it, consider work-
ing with a fnancial pro-
fessional to discuss your
interests before you invest.
He or she can help you
identify the merits of such
an investment and how it
fts into your overall fnan-
cial strategy.
Anita K. Miller, CFP,
CRPC is a Financial Ad-
visor and CERTIFIED
FINANCIAL PLANNER
practitioner with Amer-
iprise Financial Services,
Inc. in Abilene. She spe-
cializes in fee-based fnan-
cial planning and asset
management strategies and
has been in practice for 14
years. To contact her, you
may access her website at
www.ameripriseadvisors.
Investing for fun
Courtesy photo
Angela M. Holt (left) and Anita K. Miller at, Ameriprise Financial Services, Inc. 101 S. Buckeye
Ave.
Invest
in what
you know.
6 Tax and Investment Guide, January 2014 www.abilene-rc.com
Jaderborg Accounting, Inc.
Tax Tip:
2014 tax planning is extremely important
407 NE 14
th
, Abilene 785-479-6519
Accounting, Payroll, Tax Preparation & QuickBooks Training
Sandy D. Jaderborg, EA
Sponsored by:
due to the Affordable Care Act along
with expired deductions and credits.
Tim Horan Refector-Chronicle
The Dickinson County Community Foundation and President Kristine Meyer will be celebrating
the 15th anniversary of the Foundation in 2014.
By KRISTINE MEYER
President Community
Foundation
For 15 years, the Commu-
nity Foundation of Dick-
inson County has worked
hand-in-hand with donors
and their professional ad-
visors to create legacies
that provide effective so-
lutions to complex issues,
fulflling visions of a stron-
ger community.
A wellness program to
keep children healthy, af-
terschool youth programs,
community gardens and
walking trails, histori-
cal preservation efforts,
arts and theatre education,
food assistance for hungry
families these programs,
and many more, have been
funded by donors whose
generosity will live on
forever in the vitality and
beauty of Dickinson Coun-
ty.
During tax season, we
know that local philanthro-
pists are thinking about
how to link their charitable
interests with their ideal
deductions, says Kristine
Meyer, Foundation presi-
dent. A planned gift or
bequest to the Community
Foundation of Dickinson
County can achieve both.
Because community
foundations like ours fund
local charities, churches,
schools, parks, and many
other causes, we really are
driven by our donors in-
terests. That means your
contributions can do ex-
actly what you want them
to do, right here in your
hometown.
Local philanthropists Joe
and June Nold chose the
Community Foundation as
a resource for their chari-
table giving, precisely be-
cause of its fexibility and
regional focus.
We knew the Commu-
nity Foundation could best
handle our very specifc
charitable goals, com-
mented Joe. June added,
It seemed like a good
place to put in some mon-
ey to affect the way things
were going to be done in
the community. If you
like where you live, you
have got to do your best to
make it grow.
The long-term goal of a
community foundation is
to build permanent funds
supported by many do-
nors.
Offering a wide range of
fund options, the Commu-
nity Foundation of Dickin-
son County has the poten-
tial to accept a variety of
assets, such as land, grain
and other commodities,
IRAs, insurance plans, se-
curities and more.
We understand that ev-
ery donor has unique phil-
anthropic goals and ob-
jectives, Meyer remarks.
Drawing on our experi-
ence and creativity, and
in close partnership with
your fnancial advisor,
we can help you design a
planned giving solution
that addresses your specif-
ic needs both charitable
and fnancial.
The Community Foun-
dation currently stewards
nearly $8 million in chari-
table assets the result of
contributions from fami-
lies, individuals, and busi-
nesses that care about our
community. Established
in 1999, the Foundation
makes charitable giving
easy, fexible, and effec-
tive.
For more information,
call 785-263-1863, or visit
www.communityfounda-
tion.us.
Local charitable giving benefts everybody
Working
hand-in-hand
with donors
www.abilene-rc.com Tax and Investment Guide, January 2014 7


8rIan 1 Tajrhman kganry
1O4 hw 8rd Sl.
Abilene KS, O741O
Bus. (785) 2O82512
Monday Friday 8.8O AM 5.8O FM
BETTER SERVICE... BETTER
VALUE
CALL FOR A NO-OBLIGATIONFREE QUOTE.





785.263.1863
Your Charitable
Giving Resource
www.communityfoundation.us
Developing a retirement funding strategy
By CORY POWELL
Farm Bureau Agent
I am proud to be part of
this thriving community
and welcome the oppor-
tunity to introduce my-
self to you. My team of
professionals and I look
forward to delivering on
our promise: helping you
protect whats most impor-
tant. You can count on our
experience and resources
to help determine the in-
surance and fnancial strat-
egies that can best meet
your needs and objectives.
Let me share some infor-
mation about myself:
I am a graduate of the
American College with a
degree in fnancial services
specialist. I joined Farm
Bureau Financial Services
in 1999.
Different stages of life
bring about different pri-
orities and opportunities
and retirement is no excep-
tion. With people spending
more time in retirement
and the uncertainty of So-
cial Security, theres never
been a better time to re-
view your retirement fund-
ing strategies.
By analyzing your cur-
rent situation, I can help
you identify a fnancial
plan that is in sync with
your goals and desires for
the future. Together, we
can develop a retirement
funding strategy through
this simple 5-step process:
1. Identify whats impor-
tant;
2. Assess your expenses
and income sources;
3. Identify risks and de-
termine how to manage
them;
4. Develop strategies for
how and when to tap into
income sources;
5. Review your retire-
ment income distribution
strategy annually.
How you spend your time
and energy is yours to de-
termine, but remember its
never to late to take charge
of your fnancial future.
As you near retirement,
Im sure youre excited
about the prospect of hav-
ing more time to enjoy the
things that matter most to
you.
If youre like most soon-
to-be-retirees youve
thought many times about
the freedom that comes
with doing what you want,
when you want. Admit it:
youve already commit-
ted yourself to visits with
friends or family, a vaca-
tion, seeing the grandchil-
dren more, etc.
Retirement IRAs
If you chose to retire
today, would you have
enough income to main-
tain your standard of liv-
ing for 20, 30 or more
years? Even if you already
have a 401(k) or other tax-
advantaged savings plan,
you may want to consider
the benefts of investing in
an IRA now.
There are several advan-
tages to an IRA:
Help supplement your
retirement income;
Earnings are com-
pounded and accumulated
tax-deferred;
You can roll money
from a qualifed retirement
plan into an IRA without
tax consequences;
All or part of your con-
tributions may be tax de-
ductible;
You can control and
have access to your funds;
Whatever your specifc
goals and tolerance for
risk, I can help you cus-
tomize IRA investment
or retirement strategies.
Please contact my offce to
set up an appointment.
CORY POWELL
Basic
Continued from Page 3
to earn in order to double
your investment in 10
years, you would simply
divide the amount of mon-
ey, for instance $10,000,
into 72, and the answer is
7.2 percent.
You should note that this
rule of thumb does not
consider the potential im-
pact of taxes or infation.
While none of these strat-
egies can guarantee that
you will make money as
an investor, being aware
of them could help you
make more informed deci-
sions on where, or how, to
put your hard-earned sav-
ings or investment dollars
to work.
Also, remember that all
investments are subject to
risk, including the possible
loss of principal.
You should not construe
this information as ren-
dering tax or legal advice.
Therefore, you should
consult your tax advisor in
order to understand the tax
consequences of any prod-
uct or service.
Analyze
your current
situation
All New
Abilene-RC.Com
View us in Feburary
8 Tax and Investment Guide, January 2014 www.abilene-rc.com
Avoiding an audit
Wouldnt it be nice if the
IRS released its secret formu-
la for how it selects individual
tax returns for audit? That
way, wed do everything we
could to stay under the radar
and not be selected for further
review.
Fewer than 1 percent of tax
returns are audited, which is
good news for all. But theres
no way to guarantee youll be
exempt from the IRS prying
eyes, so all you can do is take
the proper precautions and
hope for the best.
MoneyTalkNews.com dis-
cusses red fags that may
trigger an audit and how to
avoid them. Look for these
tips throughout the Taxes and
Investments guide.
Shady preparers
If you dont prepare your
own return or take advantage
of the free help that is avail-
able if you make $52,000 or
less, chances are you will en-
trust someone else with your
information to prepare your
return. Just make sure the in-
dividual is legitimate, or you
may end up in the IRS hot
seat.
How do you spot a shady
preparer? If they make ridicu-
lous claims, like guaranteeing
that all of their clients will get
refunds, you defnitely want
to seek other options.
Business or hobby?
Have you been in business
for at least three years and
your tax return still refects
a loss? Chances are the IRS
may view your business ac-
tivity as a hobby, which is an-
other red fag.
And if you used a Schedule
C to claim your losses instead
of incorporating, that also in-
creases your chances of being
placed under a microscope by
the IRS.
So, what are you to do if
your business is really losing
money because its a startup
or as a result of economic
conditions? Take the deduc-
tions you are entitled to, but
maintain adequate documen-
tation to substantiate your
claims.
Too much generosity
Perhaps 2013 was the year
of giving, and you doled out
large sums of cash that were
disproportionate to your in-
come? Your actions may
raise a few eyebrows at Uncle
Sams headquarters.
According to IRS Publica-
tion 526, charitable deduc-
tions are limited to 50 percent
of your adjusted gross in-
come, with 20 and 30 percent
limitations applied in some
cases. And if your individual
contributions are $250 or
more, you must keep a bank
record showing the donation
or a document that includes
your name, the date the gift
was given and the amount.
Cash earners beware
If you are employed in a po-
sition that works for tips, such
as a bartender or restaurant
server, it is important to un-
derstand that all tips received
must be reported as income; it
is against the law to do oth-
erwise.
While it may be possible to
understate income, the IRS
has a certain threshold that it
expects servers to meet, and
any amount substantially less
may raise a high level of con-
cern, and possibly trigger an
audit.
Typographical errors
Didnt double-check your
tax return for accuracy? The
IRS may be coming for you if
mistakes are present.
Common audit fags in-
clude incorrect Social Secu-
rity numbers and employer
identifcation numbers, trans-
posed fgures and mathemati-
cal errors on the face of the
return. Word to the wise: Re-
view your return carefully to
ensure that the information
you plan to submit matches
the corresponding tax docu-
ments, as a simple mistake
can land you on the audit list.
Unreported income
What the IRS has on fle
should match the face of your
return, so refrain from omit-
ting any form of income that
you earned. And dont as-
sume that because the compa-
ny didnt give you a W-2 or a
1099 statement, youre off the
hook, because it more than
likely wrote off the expense.
Having a hard time retriev-
ing the documents? Give the
company a ring. Still no luck?
Call the IRS and Im almost
certain theyd be happy to as-
sist.
Tax credits
Unfortunately, shady tax
professionals can use tax
credits to make good on
fraudulent promises. For in-
stance, improper use of the
Earned Income Tax Credit
amounts to more than $10 bil-
lion a year. The Wall Street
Journal says: The EITCs
complex rules help lead to
high error rates by taxpayers
and even paid preparers. Its
also vulnerable to fraudulent
claims, despite some elabo-
rate safeguards that have been
built in over the years. The
Journal also says: The IRS
said in [a] statement Monday:
Every year, the IRS con-
ducts 500,000 EITC audits as
part of a broader enforcement
strategy, and EITC claims are
twice as likely to be audited
as other tax returns.
Of course, its OK to claim
credits that you are indeed eli-
gible for, but be sure to read
the IRS guidance to ensure
you qualify.
High income
Making more money may
cause problems, at least from
an audit risk perspective.
CNBC says:
People who earn more than
$1 million a year are more
than 12 times more likely to
be audited than people who
earn $200,000 or less. About
one of every eight tax flers
making $1 million or more
were audited in 2011 - double
the rate of 2009.