Are you planning to make substantial home improvements in the coming year? Normally, you can't deduct home improvement expenses on your personal tax return. However, you may be able to deduct the costs of medical improvements to your home.

It may be worth doing, but first there are several tax law obstacles to overcome.

Potential roadblocks

Under current law, you may only deduct medical expenses in excess of 10 percent of your adjusted gross income (AGI). If you don't clear that 10 percent for the year, you get no deduction. This is a high bar for many taxpayers.

To determine if you qualify for a deduction, add up the unreimbursed medical expenses that satisfy the tax law requirements. An expense counts toward the 10 percent only if it's for medical care for you, your spouse or your dependent. Conversely, an expense that is just beneficial to your general health rather than a specific health issue, or one that's done for personal motives (e.g., architectural taste) isn't deductible.

When a homeowner makes an improvement for medical reasons, the deductible amount is limited to the cost above the increase in the home's value. For instance, if a $10,000 improvement increases the value of your home by $4,000, $6,000 counts to the deduction. Improvements made by tenants are fully deductible, as they don't benefit from the increase in the home's value.

What sort of home improvements qualify?

An allergist may recommend installing central air conditioning or a swimming pool to alleviate a child's asthma. Or, you might build an elevator or bathroom on a lower floor to benefit someone with a heart condition. Other improvements could include (but aren't limited to):

• Making doorways larger

• Adding entrance or exit ramps

• Installing railings

• Modifying electrical outlets and warning systems

Don't leave matters to chance. If you qualify for a deduction, obtain a written statement from a physician prescribing the improvement, and an independent appraisal of the increase in the home's value.


"Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
 
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
 
We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, and all Chicagoland area. 

Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs.   
 
We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain.Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. 
 
For more free resources, such as Online Advisor Newsletters, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com.

Monarch Accounting Group, Inc
145 Tower Drive, Suite 4
Burr Ridge, IL 60527
Phone (630) 320-3720

Do you own real estate property far from the suburban sprawl? If you donate a part of the property as a "conservation easement" to a qualified charity you can realize a big tax deduction without relinquishing ownership of the property. Depending on the nature of the easement, you might endure only minor intrusions or inconveniences as a result of your donation.
The IRS allows a deduction for conservation purposes in four specific situations:

1. Protection of natural habitats for fish, wildlife or plants. Access by the public may be limited for environmental reasons.
   
   
2. Preservation of land for public recreational or educational use. This category includes property used for fishing, boating or a nature or hiking trail. Public use of the property must be "substantial and regular."
   
   
3. Preservation of certified historic structures. In this case, some public access is required.
   
   
4. Preservation of "open space," for the enjoyment of the public. This may be a scenic overlook of your property, rather than a walkway through it. In other words, you may not even have any visitors on your land, eliminating concerns about littering or loud noise.

Donors may also benefit from a couple of tax breaks recently made permanent by tax legislation. Normally, charitable deductions for donations of property are limited to 30 percent of your adjusted gross income (AGI), with any excess being carried over for up to five years. But the 30 percent of AGI limit has been raised to 50 percent for conservation easements (100 percent for farmers and ranchers), while the carryover period is extended to 15 years.
There is one catch. If you donate a conservation easement to charity, it must be made "in perpetuity." This means that your heirs or any succeeding owners can't develop the land for other uses, such as a golf course or ski lodge. This restriction lasts forever, so weigh your options carefully if you are considering a charitable easement.
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"Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
 
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
 
We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, and all Chicagoland area. 

Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs.   
 
We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain.Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. 
 
For more free resources, such as Online Advisor Newsletters, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com.

Monarch Accounting Group, Inc
145 Tower Drive, Suite 4
Burr Ridge, IL 60527
Phone (630) 320-3720

​Now that the kids are back in school, you may have the itch to return to the classroom yourself, perhaps to brush up on certain skills in your field or expand your horizons. Can you deduct the cost of business education? It depends.

Generally, you can deduct business expenses only if one of these two requirements is met:
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1. The education is required by your employer or is mandated by law.
   
   
2. The education maintains or improves the skills needed in your present work.

A couple caveats

That sounds simple enough, but there are also a couple things that can disqualify you for the deduction. First, if the education is required to meet the minimum educational requirements of your trade or business, then you are expected to pay that cost as a normal part of doing business — and without a tax break. Second, if the education qualifies you for an entirely new trade or business, then you also don't get to use the deduction.

It's the second caveat that often trips up taxpayers. For instance, if a nurse starts taking courses that will result in a degree as a physician, the courts have said that the education expenses can't be deducted because it qualifies the nurse for a new line of work.

If you qualify for the deductions

Assuming you do qualify, you may deduct expenses like tuition, books, laboratory fees, equipment and transportation between work and school. Typically, the cost of the trip is deductible if you go straight to class after work. You can't write off travel costs if you stop at home for a snack or to change into more comfortable clothes, however.
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When you pay business education costs out your own pocket, the expenses are deductible as miscellaneous expenses, subject to a floor of 2 percent of adjusted gross income (AGI). However, if your company reimburses you, payments are generally deductible in full by the company and tax-free to you. Alternatively, an employer may establish an educational assistance plan (EAP) that provides up to $5,250 in annual tax-free benefits to each participant.

​"Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
 
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
 
We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, and all Chicagoland area. 

Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs.   
 
We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain.Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. 
 
For more free resources, such as Online Advisor Newsletters, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com.

Monarch Accounting Group, Inc
145 Tower Drive, Suite 4
Burr Ridge, IL 60527
Phone (630) 320-3720

​Now that 2018 models are in the showrooms, you may be shopping for a new car for your business. Be aware that you can use one of two methods, the actual expense method or the standard mileage rate, to deduct business auto expenses (other special rules apply to leased car deductions).

Although the actual expense method is more work, it could provide a bigger deduction. Here's a quick recap:

1. Actual expense method: This encompasses all your expenses: oil, gas, repairs, insurance, tires, registration fees and licenses, as well as a generous Section 179 and/or depreciation allowance. Keep in mind that there a special rules limiting annual write-offs for cars deemed "luxury cars" by the IRS. The deduction is based on your percentage of business use.
   
   
2. Standard mileage rate method: Alternatively, you can use the IRS-approved standard rate, which is 53.5 cents per business mile in 2017 and adjusted annually. You can also tack on the cost of business-related tolls and parking fees to the standard rate.

Both methods require detailed recordkeeping for business trips, but the standard mileage rate can be less of a hassle because you don't have to keep track of every expense. Nevertheless, the extra work may be worthwhile. In particular, you may benefit from a Section 179 and/or depreciation allowance, including 50 percent "bonus depreciation," in the first year of ownership if you use the actual expense method. With the standard mileage rate, the cost of depreciation is accounted for in the annual rate prescribed by the IRS.
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Which mileage rate is best for you depends on your situation. We can help you do the math to find the best tax result.

"Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
 
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
 
We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, and all Chicagoland area. 

Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs.   
 
We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain.Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. 
 
For more free resources, such as Online Advisor Newsletters, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com.

Monarch Accounting Group, Inc
145 Tower Drive, Suite 4
Burr Ridge, IL 60527
Phone (630) 320-3720

Suppose you need to borrow money in a hurry and your only obvious option is a bank loan with sky-high interest — if you can even obtain one. Consider an unusual source: your 401(k) plan or IRA.
These accounts are meant to provide income for retirement, so they should not be "raided" without good reason. As a last resort, however, a 401(k) or IRA could provide the funds you desperately need.
With an IRA, you can take out the money without restraint, because it's yours to do as you wish. But you can only withdraw funds from a 401(k) with your employer's approval (if it's even permitted). The list of reasons you can make a hardship withdrawal includes:

• Unreimbursed medical expenses for you, your spouse or dependents
• Acquisition of a principal residence and certain expenses for repairing damage to your principal residence
• Payment of college tuition and related educational costs (e.g., room and board) for the next 12 months for you, your spouse, dependents or children who are no longer dependents
• Payment to prevent eviction from your home or foreclosure on the mortgage of your principal residence
• Funeral expenses

In any event, a distribution from a 401(k) or IRA is subject to federal income tax at ordinary income rates. In addition, a 10 percent tax penalty generally applies to most payouts prior to age 59½.
There are several exceptions to the 10 percent penalty that may or may not align with the reasons for hardship withdrawals. For instance, you might be able to avoid the penalty on early distributions from a 401(k) to pay emergency medical expenses, but not to pay your child's college tuition for the upcoming school year.
A hardship withdrawal is typically never someone's first choice, but sometimes it's the last option. Consider all your other options before moving ahead with a hardship withdrawal. Call us today if you'd like talk about your options.

"Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
 
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
 
We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, and all Chicagoland area. 

Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs.   
 
We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain.Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. 
 
For more free resources, such as Online Advisor Newsletters, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com.

Monarch Accounting Group, Inc
145 Tower Drive, Suite 4
Burr Ridge, IL 60527
Phone (630) 320-3720
​