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Tim Kelly will have Stockton, Roseville, Phone & Electronic Appointments Available to All Clients of the Firm
Kevin Rego is Limiting Tax Preparation to Electronic Appointments

WARNING!! Identity Theft & Exchanging Documents with Our Clients
Introducing Our Secure Client portal - SmartVault
The New Tax Law in Action

Tim's practice in Estates and Trust Taxation
New Security Brings an Increase in Costs and Fees
We Help with Serious Tax Debt Problems
IRS Announces Increase in Elective Deferrals for 2019
A Quick Primer on Changes to the Mortgage Interest Deduction
Beware the “Tax Transcript” Scam

Highlights and Changes for Our Practice for 2019

  • Certified Tax Specialist Attorney Tim Kelly will be conducting business as he has for the past twenty-two years, with office appointments in Stockton all during tax season, office appointments in Roseville for one week in February, as well as by telephone. Tim will also continue to offer secure electronic tax return preparation through use of the firm's secure client portal, called Smartvault. Any Client of Tim Kelly & Associates who still wants a face-to-face conference, or to communicate by phone is welcome to make an office or phone appointment with Tim. Make a Stockton office appointment here, schedule a phone conference here or rRegister for an electronic appointment with Tim Kelly here.
  • Tim will be available in Roseville from February 11th to the 18th. Make a Roseville appointment here
  • Certified Tax Specialist Attorney Kevin Rego will no longer be scheduling office or phone appointments. He will not be working in Roseville with Tim. He will only be available for electronic completion of tax returns through the use of our secure client portal, Smartvault. Read more. and then click here to register for electronic completion of your tax returns with Kevin Rego.
  • On or after January 22nd, cancellation or rescheduling of an office or phone appointment with less than seven days notice will result in a $50 surcharge. There is no need to reschedule only because you are still waiting for tax documents. We will accomodate you in this common situation at your original appointment by completing everything else.
  • Except where you are just waiting for tax documents to arrive, for office appointments only, we will be charging additional fees for unprepared clients who require extra follow-up time because they did not follow our appointment instructions and were unprepared as a result. In the past, this lack of readiness has caused delays for other clients who were prepared. Read more
  • Do not send us anything by US Postal Service (mail) as we will accept no responsibility for its safe delivery. We are flat-out telling you not to mail anything because of the high risk of identity theft from stolen mail, a risk you must completely assume, especially since we offer our secure client portal. Do not use DropBox, Google Drive or unencrypted email, either. If absolutely necessary, use the fax machine at any office store. Read more
  • Our tax preparation services remain focused on law enforcement, medical professionals and educational professionals. Read more about the impact of the new tax law on these professions here.
  • Access our checklists - Click here
  • We also welcome friends and family of our clients. We ask that they contact us first to ensure we are able to provide the types of levels of service they require.
  • Tim Kelly handles the taxation of trusts and estates. We will work with the attorney who is administering your trust or estate to ensure tax compliance, especially in light of the fact that a trustee or personal representative may be held personally liable if taxes are not paid first from a trust or estate. Read more
  • Tim's law practice also includes international tax issues, taxation of settlements and awards, Innocent Spouse cases, family law taxation (divorce and support), taxation of law enforcement labor unions, audits and appeals, and litigation both in the US Tax Court and US District courts. Read more
  • Tim and Kevin are Certified as Specialists in Taxation Law by the Board of Legal Specialization of the State Bar of California.

Here is a brief video explaining how to register for and use Smartvault






A Quick Primer on the Changes to the Mortgage Interest Deduction
Quite a few clients have emailed very concerned about their mortgage interest deduction after the new tax law changes that went into effect this year.  So here is the good news and bad news about the changes.

The good news: Mortgage interest is still deductible.
The bad news: It might not matter to you.  Based on the increase in the standard deduction, it might be better to forgo the itemized deductions on Schedule A and take the standard deduction instead.  We do both calculations on your individual tax return and take the deduction which provides the greatest deduction.
The good news: Mortgage interest is still deductible
The bad news: For loans taken out after 12/22/17, the top loan amount allowed for deductible interest falls from $1 million to $750,000.  Thus, if your loan balance after that date exceeds $750,000, the amount of interest attributable to the loan balance above that amount is non-deductible interest—it is lost.

The good news: The interest on some HELOC, second mortgages or “cash out” refinancing of first loans is still deductible.
The bad news: Not all interest on these types loans are deductible. The Tax Cuts and Jobs Act of 2017, enacted Dec. 22, suspends from 2018 until 2026 the deduction for interest paid on home equity loans and lines of credit, unless they are used to buy, build or substantially improve the taxpayer’s home that secures the loan.  What does that mean?  That means that ANY interest that you pay on non-qualified residential loans is not deductible - and this is "retroactive" back to the purchase of your home.

For example:  you purchased your home in 2012 with a first mortgage loan balance of $350,000.  Two years later, in 2014, your home appreciated in value and you took out a home equity line of credit (HELOC) in the amount of $50,000.  You used $25,000 to remodel your master bathroom and you used $25,000 to pay off credit card bills.  The effect of the new law:
  1. The interest on your first mortgage remains deductible
  2. The interest on $25,000 of your HELOC is deductible because you used it to substantially improve your home that secures the loan (remodel bathroom)
  3. The interest on the remaining $25,000 of your HELOC is not deductible because you used the money to pay off credit cards, no to buy/build/substantially improve your home.
Therefore, when you get your FORM 1098 (mortgage interest paid) from your HELOC Loan, you would have to be prepared to allocate interest between the deductible and non-deductible portions.

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Beware the “Tax Transcript” Scam
By now, many of us are well aware of the IRS phone scam in which a supposed “IRS employee” threatens the victim with immediate arrest if a payment is not made to settle their [non-existent]  tax debt.  It has become a bit of a joke as several of our clients have had an entertaining few minutes “toying” with the “agents” from the fictional IRS.

However, much like a virus, the scams mutate as they become less effective. Enter the next scam commonly known as the “tax transcript” scam.

In this latest attempt to separate you from your money, the scammers pretend to be from “IRS ONLINE” in an email fraud campaign.  There is usually an attachment with some variation of “tax transcript” or similar with instructions to open the attachment for important information.  When the unsuspecting recipient opens the attachment, a well know malware (EMOTET) is unleashed on your computer.  EMOTET has been associated with other bank and other financial institution phishing efforts, but recently morphed into an IRS scam.

The IRS is so concerned they issued a statement reminding taxpayers that it does not send unsolicited emails to taxpayers, nor would it email a tax transcript containing sensitive taxpayer information.  The information is available through the secure IRS online website, but this is different than regular email.
The IRS suggests deleting the email or if you are comfortable doing so, forward the scam email to phishing@irs.gov.  The IRS monitors the latest scams in a effort to get ahead of the fraudsters.

Needless to say, in no circumstances should you ever open such an attachment or enter or provide sensitive personal data to any unsolicited email.  If you ever have a question, contact Kevin or Tim and ask for advice.  We keep up with the latest scam alerts from the IRS year-round.

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IRS Announces Increase in Elective Deferrals for 2019
For 2019, the contribution limit for employees who participate in most 401(k), 403(b), and 457 (b) plans has increased from $18,500 to $19,000. The additional catch-up contribution limit for employees aged 50 and over who participate in most 401(k), 403(b), and 457 (b) plans remains unchanged at $6,000.
We continue to strongly encourage our client’s participation in deferred compensation plans offered through your employers.  We often get these questions: 

“How much should I contribute to get the best tax benefit?”
 Our answer: As much as you can!

“What’s the best ‘tax shelter’ for us?”
Our answer: Contribute the maximum to your deferred retirement plan, be it a 457, 401(k) or 403(b) plan.

Of course, we answer those questions generally as your tax adviser.  Each client is different and you should always consult your financial adviser to get specific recommendations based on your individual investment goals and circumstances.  All deferred compensation administrators offer financial counseling and advice as part of their investment programs.  Many do site visits to your workplace.  Take advantage of these visits to make a cost-free appointment, get an investment “checkup”, and ensure you are meeting your investment goals in preparing for a comfortable retirement.

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