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Volume 5, Issue 10, October 2007

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Fall Tax Planning

Fall is upon us, and now is a good time to make an appointment with your trusted accounting professional to discuss your tax situation prior to year end. While there is little left of 2007, there is still time to evaluate your options and determine whether you can make some changes now and reap the savings when you file your 2007 return.

We can help you determine which of the potential tax-saving strategies will work for your specific tax situation:

Contributing the maximum to your retirement accounts

Contributing to a 529 college savings plan

Giving to a charity

Prepaying your mortgage or property taxes

Making energy-efficient improvements to your home

Taking advantage of the gift tax exclusion

Making a charitable gift from your IRA

Selling stock owned by your child to avoid the “kiddie” tax

Purchasing a hybrid vehicle

Our certified public accountants are available to answer your questions and address any concerns you might have. If you believe that you would benefit from any of the tax-saving ideas mentioned above, contact your local Kemper CPA Group office to set up an appointment with a knowledgeable professional today.

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New IRS Standards for Necessary Expenses

The IRS has established new national standards for five categories of necessary expenses, which include food, housekeeping supplies, personal care products and services, apparel and services, and miscellaneous. Based upon the reason for the use of the standards, there are differing effective dates for the new benchmarks.

The new standards took effect October 1, 2007, for the purposes of calculating the repayment of delinquent taxes. For bankruptcy calculations, the standards will not be effective until January 1, 2008.

The standards are based upon family size, and the IRS allows taxpayers a specific amount per month for each category. If the amount claimed by a taxpayer exceeds the total amount allowed by the IRS for a specific category, that taxpayer will have to provide documentation to prove those expenses are, in fact, necessary living expenses. In addition, the number of family members used in these calculations should be the same as the number of exemptions claimed on the taxpayer’s return.

*If a family size exceeds four persons, $246 is added to the four-person total amount for each category of expense.

The friendly professionals at Kemper CPA Group LLP are here to help with your tax preparation and planning. Contact us today.

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Landlords: What to Report and What to Deduct

With the depressed housing market in many parts of the country, many people are buying bargain homes to use as rental properties. At the same time, the IRS has been paying closer attention to rental income that is under reported, or not reported at all, as it looks for ways to close the tax gap. Rental properties can be a very good investment, but it is important to be aware of what constitutes rental income and what expenses landlords are entitled to deduct.

The regular payments received by landlords for the use or occupation of their properties constitute rental income in the broadest sense and must be reported. Several other sources of income received by landlords are considered rental income.

Advance rent payments received by the landlord are includable rental income.

The fees received when a tenant terminates a lease prematurely are reportable as rental income.

Rental income can include expenses paid by the tenant(s) for the landlord; these expenses may also be deductible as rental expenses.

Property or services received as payment are considered rental income; the amount of rental income is based on the fair market value of the property or service.

Payments received prior to the date of sale on a lease when there is the option to purchase are considered rental income; payments received after that date are considered part of the selling price.

Payments received for renting part of your home may or may not be taxable rental income.

Rental income also includes any or all of a security deposit retained when a tenant fails to live up to the terms of the rental contract or lease.

Landlords can deduct the ordinary and necessary expenses related to managing and maintaining their rental properties, i.e., interest, taxes, maintenance, utilities, and insurance. Additional rental expenses may also be deductible. Consider the following:

Expenses incurred during the period of time between when the property is made available for rent and when it is rented may be deducted; however, lost rental income during that same period of time is not deductible.

All or part of the original investment in the property, as well as the cost of subsequent improvements, may be recovered through depreciation using Form 4562, Depreciation and Amortization.

The cost of repairs, including the cost of labor and materials, may be deducted, but a landlord may not deduct the value of his or her own labor.

For rental property used for personal use, only a proportion of expenses can be deducted.

Publication 527 contains additional information on rental expenses and the reporting requirements that landlords must adhere to. If you own rental properties and have any questions about the tax treatment of your rental income, or if you would like assistance calculating your deductible costs, the certified public accountants and consultants at Kemper CPA Group LLP can help. Contact an office near you to set up an appointment today.

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IRS Small Business Tax Calendar/One-Stop
Resource

The IRS has a small business tax calendar available to assist you with ensuring that your small business is in compliance with payroll tax deadlines, excise tax deposits, and vehicle taxes. The calendars are available on the IRS website for each month of the year – click here to view the November 2007 calendar.

The IRS also offers a ‘Small Business and Self-Employed One-Stop Resource’, with a variety of information and resources regarding expenses, employees, EINs, business taxes, and much more. This is a valuable resource with a wealth of information for business owners and the self-employed. If you have questions about running your business, the friendly professionals at Kemper CPA Group LLP can help. Contact us today!

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Loose Change

The September/October 2007 issue of the “Loose Change” Newsletter includes the following articles:

Investment advisory services offered by KCPAG Financial Advisors LLC, a registered investment advisor. Securities officered through Securities America, Inc., a registered broker/dealer. Member NASD/SIPC. Thomas A. Moore, John D.
Porter, Shawna D. Horne, Jeffery C. Holt, CA insurance Lic. #0E38034, Sheila Lautenbacher, Jessica Daugherty, Joseph M. Mendes, CA Insurance Lic. #0C62535, Gregory Meador, Marcia Elder, Registered Representatives. Insurance services offered through KCPAG Insurance Services LLC. Kemper Capital Management LLC and its subsidiaries are not affiliated with Securities America.

Contact Kemper Capital Management LLC for all of your investing needs.

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Kemper Technology Consulting Welcomes New
Manager at Paducah

Tom Swinford is the newly-appointed manager of the Paducah office of Kemper Technology Consulting, a division of Kemper CPA Group LLP. A graduate of Purdue University, Tom was selected for his technical proficiency and client service skills. Tom’s technical credentials include network engineering certifications from both Novell and Microsoft. He comes to Paducah after seven years of client service work in the Evansville, Indiana Kemper Technology Consulting office. Tom, his wife, Ann, and daughter, Emily, reside in the Lone Oak area of Paducah.

Kemper Technology Consulting offers a wide range of services for a variety of industries, whether you need technology services alone, or in conjunction with your accounting needs. We are committed to using the most current and advanced technology available, and our certified information technology professionals can assist you with a variety of business solutions, including:

Network design and support

Custom programming

Data security

Financial software services

Software installation and support

Technology consulting

Our consultants utilize a variety of products – Microsoft, Sage Software, Hewlett Packard, Symantec, Cisco, Novel, Gateway, Citrix, and Intuit, among others – in order to provide solutions tailored to your specific needs.

The Paducah office of Kemper Technology Consulting can be contacted at:

333 Broadway, Suite 1001
Paducah, Kentucky 42001
Phone: (270) 443-4400
Fax: (270) 443-0963

Give Tom and his staff a call, or stop by today, to learn what Kemper Technology Consulting has to offer your business. Let us show you some technology solutions that can help free up your valuable time so that you can do what you do best – manage your business. Contact us today!

Kemper Technology Consulting
Robinson, IL
618-546-5633
www.kempertc.com

Evansville, IN  •  Indianapolis, IN  •  Paducah, KY  •  Effingham, IL

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Please be advised that, based upon current Internal Revenue Service (IRS) rules and standards, the advice herein is not intended to be used, nor can it be used, as the sole basis for decisions. Additional issues may exist that could affect the treatment of the individual transactions, and this narrative does not provide a conclusion with respect to all such issues.

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