Taxpayers affected on September 11
Tax Tip of the Week
Tax Tips and Facts (monthly)
2001 tax rate cut
Certified?
Stock market jitters
Designated delivery services
529 Educational Plans
Quick cash
Broker of record
Tax relief checks

TAXPAYERS AFFECTED BY TERRORIST ATTACKS may receive quick refunds by claiming casualty losses on amended returns.

Taxpayers who have suffered property losses due to the September 11 terrorist attacks may get a quick tax refund by claiming such losses on amended returns for tax year 2000. Affected taxpayers include individuals and businesses in presidentially declared disaster areas. By amending tax year 2000 returns, taxpayers may receive refunds in a few weeks rather than after the filing of a 2001 return. Taxpayers that were granted extensions to file tax year 2000 returns may include disaster losses on such returns.

However, the amount of any loss claimed must be reduced by insurance or other reimbursements received or expected. For personal use property, individuals must first subtract $100 for each casualty event. From the remaining total losses for the year, 10% of adjusted gross income must be subtracted. The remaining amount may be claimed as an itemized deduction.

In order to expedite return processing, affected taxpayers claiming the loss on an amended return should put "September 11, 2001 Terrorist Attack" in red ink at the top of the return. Details on claiming such losses are available in IRS Publication 547, Casualties, Disasters and Thefts, and in the instructions for Form 4684, Casualties and Thefts. Publication 584, Casualty, Disaster, and Theft Loss Workbook, assists in calculating the loss amount.

Tax forms and publications are available through the IRS web site, www.irs.gov, or by calling 1-800-TAX-FORM (1-800-829-3676). The IRS also has a special toll-free number to answer tax questions from those affected by the terrorist attacks: 1-866-562-5227. Of course, you can always call my office.

I am now writing TAX TIP OF THE WEEK that is distributed over the Internet to a select list of people each week. Items may also appear in the printed monthly version. If you would like to be included in the weekly electronic distribution, just send me your e-mail address with the subject of: "TTW subscribe"

We are developing an e-mail mailing list of people that would like to be notified when each monthly edition of TAX TIPS AND FACTS is available on our web site, making it one less piece of "snail" mail to arrive at your home or business. Send us your e-mail address with the subject of: "TT&FM subscribe"

The House and Senate tax-writing panels have clarified Congress' intent regarding tax rate reduction credit for the newly created 10% bracket as enacted in the Economic Growth and Tax Relief Reconciliation Act of 2001.

During drafting of the new tax forms, Treasury and Senate Finance Committee staff discovered that the statute could be interpreted in a manner not consistent with Congressional intent. The department informed Congress that it was unsure from the statutory language whether certain individuals who were not eligible to receive a tax refund check this summer should benefit from the new 10% bracket when they file their 2001 returns. The congressmen stated that they knew there would be taxpayers who would not qualify to receive a rebate check because they did not have sufficient tax liability in 2000. However, they clarified that many of those taxpayers would have sufficient tax liability in 2001 to qualify for a 2001 tax cut.

The rebate checks currently being sent to taxpayers are intended to replicate the benefits that the new 10% bracket would have provided. Because the amount of the checks is based on the most recent available data, which was 2000 income tax returns, many taxpayers may not receive rebate checks.

Your doctor is certified.
Your lawyer is certified.
Is your accountant certified?

If your accountant isn't a Certified Public Accountant, think twice about where you are getting your advice. Who do you want handling your financial and business matters?

If your accountant isn't a CPA, it's time to seek professional help.

The current volatility in the stock market is enough to give the steeliest-nerved Wall Street veteran a case of the jitters; never mind the average investor, many of whom can no longer take the pressure and are pulling their money and heading for the exits. But where can investors put that money to receive a reasonable return with limited risk? Let's look at some of the options:

BANK CD's (national average)
1 year 2 - 3%
3 year 3 - 4%
5 year 4%

The after-tax consequences of bank CDs can drastically dilute the value of this option.

How about the US Government? They are paying anywhere from 2 to 4%, based upon the term. Not real exciting offerings here either.

However, several annuity companies offer an annuity product that will guarantee a fixed return in the 4+% range; often comparable or even better rates than CDs with the added advantage of tax deferral. Annuities may also offer more stability than bonds, taxable or tax-free, due to fluctuations in interest rates after the contract is issued. Call me for more details about annuity products and how they may fit into your plans.

It's not what you make that counts, it's what you keep!

The IRS's list of designated private delivery services (designated PDSs) has been updated to include two new delivery services.

Effective September 1, 2001, the list of designated PDSs is:

1. Airborne Express (Airborne): Overnight Air Express Service, Next Afternoon Service, and Second Day Service;
2. DHL Worldwide Express (DHL): DHL "Same Day" Service and DHL USA Overnight;
3. Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, and FedEx 2 Day; and
4. United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A.M, UPS Worldwide Express Plus, and UPS Worldwide Express.

Planning for the future is a lot like planting a tree.
You've got to do it today if you want your family to enjoy it tomorrow.

Did you know we do more than just prepare, compile, and crunch numbers?

We are not "bean-counters."

We can also advise you on estate and business planning and offer financial strategies to meet your goals. As your CPA, we know your needs better than any other professional.

If you are looking for money to buy a new car or pay off some bills, your 401(k) retirement savings plan may seem like a pot of untapped gold. But in most cases, breaking into a retirement plan early is a mistake that will melt away your savings like ice cream in the summer sun. The temptation to tap your retirement funds often comes when you switch jobs and must decide how to handle it.

The smart move is to roll the money over into another tax-deferred retirement account, such as an IRA or your new employer's qualified plan. Unfortunately, more than 50 percent of all workers "cash out" their retirement accounts when they leave their jobs, according to one survey.

Let's say you're taking a new job and you need $15,000 to buy a new car for commuting. Taking the money from your 401(k) will hurt you in two ways:

1. You lose future retirement funds that could continue to build up tax-deferred.
2. You must pay a painful tax price. Combined federal and state taxes and early withdrawal penalties can take away more than 50 cents on every dollar withdrawn early, depending on your tax bracket. That means you might have to withdraw as much as $30,000 in order to get the $15,000 you need.

As you can see, this is an extremely expensive way to finance a car. You are better off rolling the money over into a "Rollover" IRA and getting a conventional car loan. Another option if you desperately need money: check into borrowing against your 401(k) balance, rather than withdrawing the money outright. However, watch out for the withdrawal penalty and taxable income when you leave the job before paying off this loan.

Roger A. Kahan is a Certified Public Accountant, Business Advisor, and Wealth Care Professional with an office in Randolph, serving the tax and financial needs of individuals and small to medium sized businesses almost anywhere in the United States. And with the advent of the Internet, professional consultation extends to several other countries. Roger is always seeking additional clients and professionals wishing to save money and better manage their own, a friend, a relative, or a client's personal or business life. Do you know of someone that could use our professional services? Please let us know if we can use your name in an introductory letter.

Thank you.

Just because you are happy with your current group insurance plan doesn't mean there is no opportunity there for me to work with you on behalf of your fringe benefit plans. Many times corporate and other major clients never see the agent that sold them the plan. There is often little or no follow-up by the agent and no value provided for ongoing compensation received. In many cases, statistics have proven that a fringe benefit provider would welcome the opportunity to transfer the agent of record to his or her trusted advisor and allow me to oversee your group benefit plans to ensure the most competitive rates and programs available. If the original plan was sold through an agent, I could receive the ongoing commissions and be the first notified of any proposed changes in the plan premiums. This enables me to work with my affiliates, explore alternative solutions, and present my findings to you perhaps before you are even aware of the pending changes. Call me to discuss how to execute a Broker of Record form. This may not be a "Tax Tip," but this "Fact" just might save you a lot of money, aggravation, and grief.

• Separate checks will not be issued.
• The check will be issued in both taxpayer names as shown on the 2000 Federal income tax return. The check will be mailed to the address of the first TIN shown on the 2000 Federal income tax return.
• Both spouses may come to an agreement as to who gets what.
• Disputes surrounding this check are civil matters for which IRS has no jurisdiction.
• Taxpayers should seek legal counsel as in other civilian matters.

"REMEMBER: 'A failure to plan is a plan to fail"' (Anonymous)