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Peter B Diaz CPA & Associates
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(650) 400-2539
1811 Kentfield Ave
Redwood City, CA 94061
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   Prime Buyer's Report TOP 10 Chamber of Commerce-Palo Alto Chamber of Commerce-Redwood City Chamber of Commerce-San Mateo AICPA (American Institute of Certified Public Accountants) CalCPA (California Society of Certified Public Accountants)

Areas Served: San Mateo County incl. Redwood City, Menlo Park, Foster City, Portola Valley, ...
Services: specializing in tax return preparation, tax planning, tax audit representation, ...
Key Brands: Lacerte Software

Peter B Diaz CPA & Associates Articles

Peter B. Diaz, CPA, Receives 2010 Talk of the Town Award for Excellence in Customer Satisfaction

Peter B. Diaz, CPA Receives 2009 Best of Redwood City Award

Peter B Diaz quoted by Fidelity Investments at Fidelity Investors Weekly

FEDERAL TAX RULES TO BE AWARE OF IN 2008

YOUR KIDS CAN REDUCE YOUR TAXES AND GET RICH

Peter B. Diaz, CPA Receives 2008 Best of Redwood City Award

EDUCATION TAX BREAKS FOR TEACHERS AND PARENTS

 

 

Peter B. Diaz, CPA, Receives 2010 Talk of the Town Award for Excellence in Customer Satisfaction

Peter B. Diaz, CPA, Receives 2010 Talk of the Town Award for Excellence in Customer Satisfaction

Celebration Media U.S. and Talk of the Town News choose Peter B. Diaz, CPA to receive the 2010 Talk of the Town Award for Excellence is Customer Satisfaction. The award was created to showcase companies that excel in serving their customers and getting their high marks. Celebration Media U.S is an independent professional research company that monitors positive and negative reviews, blogs and social networks to determine the highest-rated and top-reviewed businesses in all 50 states of the country. Talk of the Town News provides information, resources and solutions for online reputation management. The award celebrates the highest achievements in customer satisfaction, services, management and leadership. Company ratings can be viewed at www.talkofthetown.com.

 

Updated April 16, 2010

 

Peter B. Diaz, CPA Receives 2009 Best of Redwood City Award

Peter B. Diaz, CPA Receives 2009 Best of Redwood City Award

U.S. Local Business Association's Award Plaque Honors the Achievement

WASHINGTON D.C. -- Peter B. Diaz, CPA has been selected for the 2009 Best of Redwood City Award in the Tax Return Preparation & Filing category by the U.S. Local Business Association (USLBA).

The USLBA "Best of Local Business" Award Program recognizes outstanding local businesses throughout the country. Each year, the USLBA identifies companies that they believe have achieved exceptional marketing success in their local community and business category. These are local companies that enhance the positive image of small business through service to their customers and community.

Various sources of information were gathered and analyzed to choose the winners in each category. The 2009 USLBA Award Program focused on quality, not quantity. Winners are determined based on the information gathered both internally by the USLBA and data provided by third parties.

About U.S. Local Business Association (USLBA)

U.S. Local Business Association (USLBA) is a Washington D.C. based organization funded by local businesses operating in towns, large and small, across America. The purpose of USLBA is to promote local business through public relations, marketing and advertising.

The USLBA was established to recognize the best of local businesses in their community. Our organization works exclusively with local business owners, trade groups, professional associations, chambers of commerce and other business advertising and marketing groups. Our mission is to be an advocate for small and medium size businesses and business entrepreneurs across America.

SOURCE: U.S. Local Business Association

CONTACT:
U.S. Local Business Association
Email: PublicRelations@USLBA.net
URL: http://www.USLBA.net

 

 

Updated April 16, 2010

 

Peter B Diaz quoted by Fidelity Investments at Fidelity Investors Weekly

4 Tax Steps to Consider Now
Don't wait until it is too late

By Rick Sauder Published: June 10, 2008

You would think it would be hard to persuade someone to put hundreds or even thousands of dollars into a savings account that didn't pay interest and would allow withdrawals only once a year. Yet that's what millions of taxpayers do when they overpay on their income taxes and receive a refund check.

Evaluating the accuracy of your income tax withholding is just one of the smart tax moves that accountants strongly recommend for taxpayers doing their mid-year tax planning, because it's early enough to be the most effective.

"The longer you wait, the harder it is to do any significant planning," says Peter Diaz, a certified public accountant in Redwood City, Calif. "I tell my clients to get a baseline on their tax situation early so they don't have any surprises when it's too late to do anything about it."

Diaz says a mid-year tax review should target:

* How much you overpaid or owed on your 2007 tax return;
* Changes in personal circumstances that may affect your taxable income and deductions;
* Tax code changes that may impact the amount of tax you owe; and
* Strategies to lower your taxable income that you haven't taken full advantage of in the past.


Step 1: Revisit your withholding
Getting a big refund or having to write a big check at tax time are both consequences of the same problem -- failing to accurately estimate how much tax you owe for the year. And neither works to your advantage, Diaz says.

"It's not smart to get a big refund," he says. "Ideally, you want to owe a little at the end of the year, but not so much that you would have a penalty for underpayment."

Most taxpayers can avoid a penalty for under-withholding if they pay enough during the course of the year to cover at least 90% of their tax bill, or if they pay at least 100% of the tax shown on the return for the prior year, according to the Internal Revenue Service.

To change your withholding amount, have your employer revise your IRS Form W-4. If you're self employed, adjust your quarterly estimated tax payments.

Learn more
Get withholding help from IRS Publication 919, How Do I Adjust My Tax Withholding?

Step 2: Evaluate changes in circumstances
If you have already made or are planning to make major changes in your life, remember that they may have tax consequences. For example, says Diaz, buying a new home will likely lower your tax bill, because you'll be able to deduct your mortgage interest and any "points" you paid when you took out your loan.

Similarly, a new child in the family typically generates an additional dependency exemption of $3,500 for 2008, up $100 from 2007.

Another event with significant tax consequences is a child starting college. You might be eligible for a Hope scholarship credit of as much as $1,800 for each enrolled child or a Lifetime Learning credit of up to $2,000 per tax return. If your income is too high to qualify for one of the credits, you might be able to claim a tuition and fees deduction of up to $4,000.

Learn more
See IRS Publication 970 for details of the education credits and deductions.

Conversely, you could incur a significantly higher tax bill if you sell stocks that have greatly increased in value, get a big promotion at work, or receive an inheritance.

Whatever the event, you should incorporate it into your tax planning as soon as possible.

Step 3: Be aware of tax code changes
Tax code changes can significantly impact how much tax you owe, yet many people aren't aware of them until it's too late to benefit -- or to avoid their consequences.

Two items that taxpayers should look at closely in 2008 are the "kiddie tax" rules and the sales tax deduction, says Cynthia Dulworth, a certified public accountant at Sanford, Baumeister and Frazier in Fort Worth, Texas.

The new kiddie tax rules for 2008 make it much harder for parents to shift a large amount of investment income into a child's account so that it will be taxed at the child's lower rate. The new rules specify that a child with unearned income of $1,800 or more will have to pay tax at the parents' rate on the amount of the income that exceeds $900 (the dependent child's standard deduction). The new rule even applies to children ages 19 to 24 if they're full-time students.

There is an exception, Dulworth points out, for children who have earned income that covers half of their support. (For purposes of the kiddie tax, support includes the fair rental value of lodging, clothing, education, medical care, transportation, entertainment, etc.) So parents with small businesses who can employ their children and legitimately pay them enough to satisfy the threshold may be able to limit the impact of the kiddie tax.

But, Dulworth adds, "Many people are going to have to restructure how they transfer money to their children." That might include:

* Opening a Coverdell Education Savings Account or 529 plan college savings account, in which the earnings are not taxed if they're used for qualified higher education expenses;
* Investing in equities more likely to generate long-term capital growth than current-year income; or
* Choosing tax-exempt or tax-deferred bonds.


How Fidelity can help
Learn more about Fidelity managed 529 accounts.

Another big tax change to watch, Dulworth says, is the scheduled expiration in 2008 of the option to deduct state and local sales tax instead of state and local income tax. That's significant for people in Texas and other states without an income tax. For example, a family of four in Fort Worth with income of $90,000 to $100,000, would have been able to claim a sales tax deduction of $1,566 in 2007, according to the IRS sales tax deduction calculator.

Still, Dulworth is hopeful that Congress will reinstate the option before the end of the year, and she advises taxpayers to continue monitoring tax law changes. Last year, Congress made its last major adjustments just before Christmas.

Another action that many taxpayers are hoping Congress will take before the end of the year is once again "patching" the alternative minimum tax, or AMT.

Originally intended to prevent the wealthy from avoiding paying any tax, the AMT in recent years has resulted in millions of taxpayers, many of them in the middle class, owing more in taxes. Last year's last-minute patch raised the AMT income exemption to $66,250 for joint filers and $44,350 for individuals -- but only for 2007. Unless further action is taken, the exemption levels would revert to $45,000 for joint filers and $33,750 for individuals.

Dulworth notes another popular tax credit expiring this year is one for making energy-efficient home improvements, such as improved storm windows and doors. "It wasn't a huge tax break, but a lot of people took advantage of it," she says.

On the good news side, Peter Diaz notes that the long-term capital gains tax rate is reduced to zero for tax years 2008 through tax year 2010 for taxpayers in the 10% and 15% tax brackets. People in those brackets have taxable income below $65,100 for joint filers and $32,550 for individuals.

Therefore, Diaz suggests that "It's a real advantage for taxpayers who don't have a lot of salary income but have a lot of stock -- like someone who has been laid off and has a lot of stock options." He says, "We have a lot of people like that in the Silicon Valley. If you're in that situation, you can cash out some of the stock that would otherwise have been taxed at higher rate."

Step 4: Take advantage of opportunities
If you find that you make a promise to yourself every year at tax time that you will put more income into tax-deferred accounts -- but never following through -- now is the time to make good on the promise for 2008.

"I encourage clients to take full advantage of their 401(k) plans and IRAs to reduce their taxable income," Diaz says. "At a minimum, it's silly not to at least put enough in your 401(k) to get the full employer match."

Participants in 401(k) and 403(b) plans can contribute up to $15,500 ($20,500 if they're age 50 or older by the end of the tax year) in 2008 and reduce their current-year taxable income by that amount. But it's hard to get there, Diaz says, if you wait too long into the year to increase your paycheck contributions. Check in with your employer now to increase your payroll deduction.

Also in 2008, the amount of qualified contributions to a Traditional IRA or a Roth IRA increases $1,000 to $5,000 per eligible taxpayer ($6,000 for people 50 and older).

Furthermore, Diaz is encouraging clients who cannot contribute to a Roth IRA -- because their income exceeds the contribution limits -- to make nondeductible contributions to a Traditional IRA this year and next. Because in 2010, the income limit for converting a Traditional IRA to a Roth IRA disappears -- currently only those with modified adjusted gross income below $100,000 could convert. So those nondeductible Traditional IRA contributions can be converted to a Roth, giving his clients "a nice jump start," because they will only have to pay tax on the earnings, not the principal.

 

Updated April 16, 2010

 

FEDERAL TAX RULES TO BE AWARE OF IN 2008

FEDERAL TAX RULES TO BE AWARE OF IN 2008

(By Peter B. Diaz, CPA)

 
Below are some miscellaneous tax rules that may affect certain taxpayers in 2008.  The list is not all-inclusive but intended to get taxpayers to start thinking about tax planning for 2008 and ways to reduce their tax burden.

 
  • Qualified taxpayers may elect to immediately expense, as a business deduction, up to $128,000 of assets placed in service during 2008.  This avoids having to claim depreciation expense and a write-off of the cost over a long period of time. 
  • The maximum contribution to Traditional and Roth IRA accounts increases to $5000 in 2008.  Taxpayers who are at least age 50 in 2008 may make an additional $1000 contribution for a total of $6000.  The maximum contribution to a 401(k) plan for 2008 is $15,500 and the maximum contribution to a defined contribution plan increases from $45,000 in 2007 to $46,000 in 2008.  The limitation on SIMPLE retirement plans remains unchaged at $10,500.
  • Certain college age children may be subject to the �kiddie Tax� if their investment income exceeds certain limits.  This will subject the child�s income to the parents tax rate.
  • Capital gains and qualified dividends continue to be taxed at a maximum rate of 15% through 2010.  Capital gains and qualified dividends will be taxed at a Zero percent for individuals in the lowest ordinary income tax brackets (10% & 15%).
  • The top individual tax rate remains at 35%.  Keep an eye on congress going forward.
  • Personal exemptions against income for yourself and each dependent will be $3500 in 2008.  Standard deduction amounts are $10,900 doe married individuals filing joint returns; $8,000 for head-of-household; and, $5,450 for single individuals and married individuals filing separately. 
  • Earnings subject to Social Security and Medicare Tax in 2008 will be based on the first $102,000 of earnings at a total tax rate of 15.3% (self employment tax rate, half that rate for employees).  Earnings above the $102,000 base amount are only subject to Medicare Tax at a rate of 2.3% (for self-employed taxpayers; half that rate for employees).
  • The IRS standard mileage rate for business use of an auto is 50.5 cents per mile in 2008 (up 2 cents from 2006).
  • When originally enacted, the Alternative Minimum Tax exemption amounts were not indexed for inflation.  For the last few years congress has temporarily increase those amounts.  In 2008, the Alternative Minimum Tax exemption remains at the 2007 level then drops to prior lower levels if congress does not act to extend or adjust the increased exemption amounts.  Many taxpayers will be subject to the Alternative Minimum Tax and have a higher tax burden.
  • You may qualify for a 30% Energy Credit if you purchased and installed any residential solar energy equipment in 2008.
  • Businesses involved in certain US manufacturing, construction and production activities may qualify to deduct 6% of the net income from such activities in 2008.  The deduction is subject to certain net income limitations and wage limitations.
  • For 2008, an individual may make a gift of up to $12,000 to any person without having to file a gift tax return for the taxable year.  There is no limit on the number of $12,000 gifts a person can make.  Accordingly, an individual can make $12,000 gifts to ten different individuals for a total of $120,000 in gifts.  No gift tax return would need to be filed.

 

Updated April 16, 2010

 

YOUR KIDS CAN REDUCE YOUR TAXES AND GET RICH

YOUR KIDS CAN REDUCE YOUR TAXES AND GET RICH

(By Peter B. Diaz, CPA)

One often-overlooked tax benefit for business owners is putting their kids to work in their business.

If you are self-employed you can take advantage of this by paying your kids $4,000 each for performing services in your business. The business gets a tax deduction for the compensation and that saves taxes on the parent's tax return. Also, there is no Social Security or Medicare Taxes due on the wages you pay to your child.

The next step is to open a Roth IRA for the child and contribute the $4000 to the IRA. The child may not withdraw this money until age 59 1/2. The earnings and the amounts contributed grow tax-free and are generally never subject to tax when withdrawn. On the child's tax return, the child gets no tax deduction for the IRA but the child may not pay tax on the $4000 if he or she is at a low enough level of income.

If you do this for 10 years, from age 8 to 18, and the IRA earns an 8% return each year, your child should have around $1.5 million at age 60 and that should grow to over $2 million by age 64.

If you plan to do this, consult with a professional tax advisor first and be sure your children are actually performing services for your business. Also, check that the work is not violating any child labor laws.

Peter Diaz is a Tax Advisor in Redwood City and has been practicing tax consulting for 23 Years. He can be reached at 650-400-2539

 

Updated November 21, 2008

 

Peter B. Diaz, CPA Receives 2008 Best of Redwood City Award

Peter B. Diaz, CPA Receives 2008 Best of Redwood City Award


U.S. Local Business Association's Award Plaque Honors the Achievement


WASHINGTON D.C., July 16, 2008 -- Peter B. Diaz, CPA has been selected for the 2008 Best of Redwood City Award in the Tax Return Preparation & Filing category by the U.S. Local Business Association (USLBA).

The USLBA "Best of Local Business" Award Program recognizes outstanding local businesses throughout the country. Each year, the USLBA identifies companies that they believe have achieved exceptional marketing success in their local community and business category. These are local companies that enhance the positive image of small business through service to their customers and community.

Various sources of information were gathered and analyzed to choose the winners in each category. The 2008 USLBA Award Program focused on quality, not quantity. Winners are determined based on the information gathered both internally by the USLBA and data provided by third parties.

 

About U.S. Local Business Association (USLBA)


U.S. Local Business Association (USLBA) is a Washington D.C. based organization funded by local businesses operating in towns, large and small, across America. The purpose of USLBA is to promote local business through public relations, marketing and advertising.


The USLBA was established to recognize the best of local businesses in their community. Our organization works exclusively with local business owners, trade groups, professional associations, chambers of commerce and other business advertising and marketing groups. Our mission is to be an advocate for small and medium size businesses and business entrepreneurs across America.


SOURCE: U.S. Local Business Association

 

 

 

Updated November 21, 2008

 

EDUCATION TAX BREAKS FOR TEACHERS AND PARENTS

EDUCATION TAX BREAKS FOR TEACHERS AND PARENTS

Teachers, parents and students can take advantage of various education-related deductions and credits on their 2007 federal income tax return.

The educator expense deduction allows teachers and other educators to deduct the cost of books, supplies, equipment and software used in the classroom. Eligible educators include those who work at least 900 hours during a school year as a teacher, instructor, counselor, principal or aide in a public or private elementary or secondary school. Worth up to $250, the educator expense deduction is available, whether or not the educator itemizes their deductions on Schedule A. In tax-year 2005, teachers and educators deducted just over $893 million of these out-of-pocket classroom expenses. Under current law, this deduction is scheduled to expire at the end of this year.

Three key tax breaks�the tuition and fees deduction, the Hope credit and the lifetime learning credit�help parents and students pay for the cost of post-secondary education. All three are available, regardless of whether an eligible taxpayer itemizes their deductions. Under current law, the tuition and fees deduction is scheduled to expire at the end of this year, but the two credits remain in effect. In tax-year 2005, taxpayers claimed tuition and fees deductions totaling nearly $11 billion and education credits of almost $6.2 billion.

Normally, a taxpayer can claim tuition and required enrollment fees paid for their own and their dependent�s college education. A taxpayer cannot take both an education credit and the tuition and fees deduction for the same student in the same year. Income limits and other special rules apply to each of these provisions. Education credits are claimed on Form 8863, and the tuition and fees deduction for 2007 will be claimed on new Form 8917.

IRS Publication 970, Tax Benefits for Education, can help eligible parents and students understand the special rules that apply and decide which tax break to claim. The publication also describes other education-related tax benefits, including qualified tuition programs (also known as 529 plans), the student loan interest deduction, Coverdell education savings accounts and the education savings bond program.

 

Updated November 21, 2008