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Monday, January 25, 2016

Here We Go Again

That was fast!  Here we are again, packing away holiday decorations; promising ourselves we will go the gym, and the unabashed using of kitschy names for what used to just be a snow storm or blizzard (think “snowmageddon” and “snowpocalypse”).  

It is also the beginning of tax season and time to start hunting and collecting. It is important for you to understand in most cases money received is counted as income unless tax law provides for an exception.

When is money generally not counted as income?  A gift is not included as part of your gross income nor is money you borrow. However, if you don't pay the borrowed money back and the lender "forgives" the debt, then the "forgiveness of debt" is included as part of your gross income. Although like everything that has to do with taxes, there are also exceptions regarding forgiveness of debt.

What happened last year that may change your taxes?
  • Birth of a child
  • Marriage or Divorce
  • Purchase or sale of personal residence
The thing to keep in mind about the first two items is that as far as the tax authorities are concerned – whatever your status was on December 31st, is your status for the whole year. So those of you that had a baby on the last day of the year, you have a new deduction for the entire year!

Most of you probably know that mortgage interest continues to be a tax deductible item. And so are your real estate taxes. If you bought a home, make sure to give your accountant a copy of your HUD closing statement as there are some small deductible items that only show on that form.

A gain on the sale of your primary residence is a bit more involved and depending on your specific circumstances, it could be excluded. To exclude the gain on the sale of your home from income, you must own and occupy the property as your principal residence for two of the five years immediately before the sale. However, the ownership and occupancy need not be concurrent. The law permits a maximum gain exclusion of $250,000 ($500,000 for married taxpayers). This is known as the 121 Exclusion aptly named after the Internal Revenue Code Section 121. And even if you qualify for a full exclusion, while the gain may not be taxable, it is still has to be reported.

Be aware that the gain on any portion of a residential property you didn’t use for residential purposes is taxable.  Any post-May 6, 1997 depreciation allowable on the property triggers recognition of otherwise excluded gain.

You can typically only claim the 121 Exclusion once every two years. However, a taxpayer who disposes of more than one residence within two years due to a job change or health problem, may qualify for a reduced exclusion amount.

Documents you need to prepare your return:
  • W-2
  • 1099-INT (bank, credit union and other interest you receive)
  • 1099-DIV (for dividends from your non-retirement investment accounts)
  • 1099-G (money received from a government agency such as your prior year state refund)
  • 1099-MISC (for services you provided to clients, rents received or royalties etc)
  • W-2G (gambling wins)
  • 1099-B (broker reporting statements for the sales of securities)
  • 1098-INT (mortgage interest you paid to a lender)
  • 1099-R (pension, 401(k), IRA or annuity distributions)
  • 1099-SSA (Social Security benefits received)
 Keeping good tax records helps your accountant make sure you get all of the deductions to which you are entitled. It also makes her like you – a lot!  Make it easier on both of you by coming up with a system and sticking to it. It doesn’t have to be fancy and can be as simple as stashing items in a folder as you receive them and then doing a little adding up at the end so you present her with category totals and have all the documents you received in one place. Not only will good record keeping save you time and reduce your stress during tax season,   if the IRS ever had any questions, good records could save the day!


As someone who struggled most of my adult life with weight issues, this is a topic about which I am passionate.

Getting healthier is not about a diet or short term plan, it is about changing how you live. Trying to do it all at once is a sure way to fail. Not trying to do it at all is also a sure way to fail. Because change does not happen overnight, it is important to realize that the adjustments you make are life adjustments, not a stop-start effort. It begins with a commitment to yourself and learning how to quiet the negative head chatter.

For me, the first step was realizing I possessed the ability to change my life. I am not weak willed, hopeless, a victim of genetics, or powerless.  All of these thoughts are negative and self-defeating and while somehow it seemed acceptable to talk about myself this way, I would never talk about YOU using these very same words. 

I am motivated, able, and an addict. I am addicted to junk food, sugar, and simple carbohydrates. I describe myself as having the palate of an eight year old boy. I did not get to unhealthy weight by eating salad, grilled chicken and vegetables. But believe me, that is not all I eat now and over a number of years, I have lost and kept off 70 pounds.  

Don’t Do It Alone - If I Can You Can

While ultimately we are all responsible for our own success, it is important to get support from the people around you. You will need to be brave, direct and brutally honest with yourself and others. I found it hard to say out loud, all the things I had been silent about for so long. If you want to succeed, it is crucial to build a healthy support system and ask for help. Tell your friends, family and even coworkers, what your goal is and how you plan to reach it. Let them know what you cannot eat and in my case, what foods I cannot be around. 

Their support is important.  But be aware that not everyone will be on board because they do not understand or perhaps have their own food issues. I had many people tell me, “you can have just one”, or “start tomorrow”, or “you are thin, this won’t hurt”. But it will hurt, because once I start, I cannot stop. Would you tell someone who stopped drinking “you can have just one”? 

I have also found that there are many free apps and websites that help keep me accountable. They force me to be mindful of what I eat, or how many steps I take daily. Some of the apps reward you for keeping track!   

One of my favorites is Wellcoin, whose tagline is “It pays to live healthy”.  Earn wellcoins for making healthy choices and then cash them in for free gym classes, workout gear, and healthy food (to name a few). You can connect with their community to give and get the support and encouragement you need to make your healthy changes a new way of living. 

Follow this link and sign up now – it’s free!

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