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    Skip Lovette, CPA
    Skip benefits from 20+ years in the tax and financial services field. He is a certified CPA and holds numerous other professional designations and certifications.

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 How to Maintain Your Documents for Your Taxes

2/27/2017

 
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​At Lovette CPA, we are highly skilled and experienced with tax regulations and preparation for filing your return. However, we encourage you to be responsible for providing the right documents to ensure our tax returns are done properly and yield the highest return. Here’s some basic tips for keeping track of the right documents:
 
Track paperless records
Paperless banking may have turned shoeboxes into receipt relics of the past, while your online statements often contain key backup records for potential deductions such as:
 
  • Charitable donations
  • Spending for health care
  • Job-search expenses
  • Unreimbursed work expenses
 
Many of us ignore the line items from these statements until we start our annual tax-filing ritual. But you may save time by taking a few extra minutes each month to jot down tax-related information including:
  • Expense title
  • Check numbers
  • Payee names
  • Dollar amounts
  • Dates
 
Create a spreadsheet dedicated to tax records. Throughout the year, consider downloading and printing online documents that will be available for only a limited time.
 
Think deductions throughout the year
Keep a mileage log in your car. Jot down the miles when you use your vehicle for volunteering, work, business or medical appointments as well as parking, bus and taxi fares and tolls can help you qualify for a deduction.
 
Hold on to cash receipts that document your transportation, charitable work, job-search and other tax-deductible activities. Hold on to any paperwork and documents that arrive in the mail, or receipts needed to prepare the return, even if you're not sure. It's always better to have too much information than not enough.
 
Life events you experience
Documents related to life events such as marriage, death of a spouse or divorce, alimony payment records, adoption papers and child custody agreements should all be saved. A newborn brings joy into your life and potential tax advantages. When you sit down to prepare your return, have these documents for dependent children close at hand:
 
  • Social Security card
  • Childcare receipts
  • Contributions to college savings plans
 
Buying a home presents tax-saving opportunities. New homeowners should keep paperwork such as:
 
  • Closing documents
  • Home improvement invoices, receipts and proof of payment
  • Annual mortgage statement
 
It's good to keep your closing documents in case you paid real estate taxes or points when you closed that don't appear on your year-end mortgage interest statement. Home improvements such as wheelchair ramps recommended by a doctor may be deductible as medical expenses if you itemize deductions. Certain energy efficiency improvements also may help you reduce your tax liability. Remember, when you use TurboTax to prepare your taxes, we'll ask you simple questions to ensure you don't overlook any possible deductions.
 
Keep your filing history
The value of a tax return doesn't end on April 15. You'll need to provide this document to get a mortgage, apply for student loans and to check the status of your refund on the Internal Revenue Service's "Where's My Refund?" web page. Generally, the IRS can audit you for three years after a filing date, and in some cases even longer, so guard your return copies and support documents just in case. The IRS can audit you as many years back as they would like if it suspects fraud, so keeping tax returns and supporting documents for at least seven to 10 years puts you on the safe side.
 
With more than 20 years of experience, Lovette CPA, P.A., is a true business resource, offering a wide range of services to individuals, families and businesses of all sizes. We have locations in Greensboro and Raleigh. For more information, call us at 336.346.1960, visit our website, www.lovettecpa.com, or e-mail skip@lovettecpa.com.
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Student Loans: Important Considerations Before Signing

2/2/2017

 
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Beware: student loans can have unforeseen, long-lasting implications for a family's financial future. At Lovette CPA we can help you navigate through the confusion to make a decision that makes the most sense to you and your family. The following will offer a description student loans that we hope you’ll find helpful.
There are two types of student loans.
  • Federal student loans (FSLs) are issued directly to students by the federal government. Private student loans are issued by banks or other financial institutions.
  • FSL interest rates are either subsidized or unsubsidized. Subsidized FSLs do not accrue interest while the student is in school. Unsubsidized FSLs accrue interest while the student remains in school.
  • FSLs and private loans have different repayment terms. The repayment terms for FSLs are more flexible and offer relief if needed. Private student loan terms are set by the lender and offer little flexibility or relief if the student has trouble repaying.
  • FSLs are based on the student's financial need, not on the borrower's credit rating, whether the borrower is the student, the parents, or someone else. The only exception among FSLs is the parent PLUS loan. Financial need is calculated as the difference between the cost of attending a school and the student's expected family contribution.
These four points are certainly not exhaustive, but they are a good place to start as you consider student loan options.
​
PLAN FOR FINANCING COLLEGE WITH STUDENT LOANS
There are many things to consider when financing college with student loans:
  • FSLs typically have lower interest rates. The interest rate on an FSL is often lower than on a private student loan. (However, private student loans can have lower interest rates if the student and the co-signer have excellent credit.) Even if a student's or a parent's employer offers special access to private student loans, check out the availability of FSLs before choosing a private student loan.
  • Keeping interest under control is important. While in school, students should consider paying the interest that accrues on an unsubsidized loan to minimize the overall interest they will pay on the debt.
  • Students do not need to borrow all the money available. If possible, students should borrow only what they need to cover tuition, books, and fees, and pay living expenses with income earned by working part time or applying for a work-study program as part of the Free Application for Federal Student Aid form.
  • Details can be costly and shouldn't be overlooked. When applying for a private student loan, ask questions of the lender, read the terms very carefully, and, more importantly, read the promissory note. Consult a CPA like the pros at Lovette CPA if you are unclear about any details.
  • Whether students apply for an FSL or a private student loan, they should plan the loan backward. In other words, students should think ahead to the loan repayment. What are their job prospects given their major and degree? What will they earn right out of school? High student loan debt—whether for an FSL or a private loan—can limit the choices students have when they look for a job. Recent graduates may have to move back in with their parents until their student loans are paid off. That's why students should have a realistic idea of the amount of their monthly loan payments. This information can help them make more informed decisions about how they want to finance their college education and, in some cases, which major they elect.
INCOME-DRIVEN PLANS: THE DETAILS
If you’re struggling to make their monthly student loan payments, they may want to consider income-driven repayment (IDR) plans. These plans are available through the U.S. Department of Education's Office of Student Aid for any borrower with eligible federal student loans. All Direct and FFEL student loans are eligible. Parent PLUS and Perkins loans are eligible if consolidated. IDR plans help borrowers avoid delinquency and default when their monthly debt payment consumes a high proportion of their monthly income. IDR plans do have a downside: Paying back the loan over a longer period means the borrower will pay more interest.
All IDR plans have the following aspects in common:
  • They can be used by borrowers who have a financial hardship. This is determined based on the size of the standard student loan payment as a percentage of the borrower's discretionary income. Discretionary income is calculated by a formula that takes into account family size, household income, and the size of the loan compared with 150% of the federal poverty level. It is used to determine qualification for a loan and the size of the monthly loan payments during the 12-month period during which a borrower is qualified.
  • They require annual recertification. The borrower must reapply every 12 months.
  • They offer loan forgiveness of any remaining student loan debt not paid after 20 to 25 years.
  • The federal government may provide a subsidy on interest accrual if the monthly IDR payment does not cover the total amount of interest. In most cases, the subsidy is only given for a limited period (e.g., three years).
However, in other respects the types of IDR plans differ. It’s difficult to determine which IDR plan is right for you, and Lovette CPA can be your guide.

With more than 20 years of experience, Lovette CPA, P.A., is a true business resource, offering a wide range of services to individuals, families and businesses of all sizes. We have locations in Greensboro and Raleigh. For more information, call us at 336.346.1960, visit our website, www.lovettecpa.com, or e-mail skip@lovettecpa.com.
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