Located at:

38 Fraley Street

Kane, PA 16735


Fax (814) 837-2267

Phone( (814) 837-9150

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2010/2011 Year End 1040 Client Letter
We are once again writing to remind you of law changes, problem areas, and information we will need to prepare your business tax return.

We are surprised how quickly the year has passed! On the income tax scene Congress continues to work on last minute income tax bills as of the date of this letter, but you can be assured we stay abreast of all the latest changes as they occur! With the economic issues this year you can be sure that we will work more diligently than ever to keep your tax bill at the lowest legal amount.

We are once again making our tax organizers available, for free, to anyone who requests one-if you have not used one in the past please call the office to request one for 2009. It is our attempt to be as thorough as possible in the preparation of your return. If you received an organizer last year we will mail this year’s organizer to the same address. The tax organizer may not be enough however, and we wanted to bring some special items to your attention below.


Home Owner Energy Credits


If you (and spouse if married) made or are considering investing in insulation, storm windows or doors, high efficiency furnaces or water heaters or similar energy improvements there is a 30% Federal income tax credit available in many cases. The bad news? It expires December 31, 2010 so get those improvements done now!


New Hybrid, Electric or Diesel Cars or Trucks


Several special new tax credits are available this year if you bought a brand new car, light truck, motorcycle or RV during the year. If you bought a new vehicle please bring us a copy of the invoice so that you get this special credit..


Mortgage Interest

    Recent IRS scrutiny of home mortgage interest deductions now require us to carefully track re-financings and the use of loan proceeds. Please provide us with any new home loan information, closing statements from any re-financings, and a summary of what any additional loan proceeds were used for.


New Cars or Trucks


Several special new tax deductions and credits are available this year if you bought a brand new car or light truck during the year. If you bought a new car please bring us a copy of the invoice so that you get this special item or deduction.




A scary IRS court case in 2008 reminds us of the rules on charitable contributions. ALL deductions of any amount must have a receipt. Any individual contribution over $250 must also have an acknowledgement letter from the charity, and the letter must be dated by the date we file your return. The letter should show the date and amount of any individual contribution over $250, and should also state that no goods or services were received in return for the contribution.


Foreign Accounts



If you have read any news in the last year you know that the IRS is looking closely for offshore accounts. If you have an account with over $10,000 in a foreign country, or a foreign business ownership (not through a mutual fund) please let us know as some special rules will apply to you.


Mileage Deductions

    Deductible mileage rates changed during the year. Please provide us with the number of medical miles you drove during the year for this deduction. This includes trips to the doctor, dentist, pharmacy, dialysis, etc.

Education Credits

    A major revision of college credits by President Obama has provided us with the new “American Opportunity Credit”, a special credit for undergraduate college students. If you have children in college or near to college, please discuss some options with us to assure that you receive the best benefit for these costs.
  Roth IRA Conversions  
    You will be hearing from lots of “experts” this year that you need to convert your retirement accounts to Roth IRAs. While there are a number of advantages to conversions, there are an equal number of disadvantages that carry some major tax consequences. Please do not convert your accounts in 2010 without coming in to see us for an appointment to discuss both the positives and negatives. All conversions for 2010 must be completed by December 31, 2010.

Gift Changes

    Effective 1/1/2009 the amount you may give to one person in one year without any return filing requirements has been increased to $13,000. . Additionally, Congressional inaction on the estate tax front requires most people that have any substantial net worth to immediately consider estate planning. Please contact us to discuss these issues.

Worthless Stocks and Bonds


If you own stocks or bonds that became worthless this year please be sure to provide us with the cost and purchase dates so that we can take any allowable deductions.

  Future Changes and Request  

With record Federal deficits predicted for the next 10 years, it is a foregone conclusion that future tax rates will be substantially higher than today. If you are considering selling property or stock there is a good chance that 2009 will be the lowest capital gains rates any of us will ever see again, and the 2009 rates continue to be the lowest rates since before World War II. You might want to discuss some tax strategies with us if you are expecting a major asset sale in 2010 or 2011.

There are literally hundreds of other changes, extensions and deletions that we will consider this year while preparing your return. Because of these changes we are requesting everyone to try to have their tax information in to us at least two weeks earlier than normal, and no later than March 10, 2010. Please rest assured that we will utilize our best resources to once again provide you with timely, complete and accurate service while keeping your tax burden to the lowest legal amount. Thank you again for your continued support.

  Password Protection  
    Remember the password format for documents that we email to you follows either an either 8 (eight) or 9 (nine) character format. Most document will consists of the 8 (eight) character format. However, in some cases, it may be a 9 (nine) character format.

Protection using 8 (eight) character protection:

·        INDIVIDUAL— An 8 (eight) character protection will consists of the first four letters of your last name (in lower case) follow by the last four digits of your social security number. In the case of husband and wife, the social security number will be that of the husband. For example, Ralph and Mary Smith with a Social Security number of the husband of 123-45-6789 would have a password of smit6789.

·        CORPORATION— An 8 (eight) character protection will consists of the first four letters of your COMPANY NAME (in lower case) follow by the first four digits following the hyphen of your federal employment identification number. For example, The Smith Corporation with a federal employment identification number of 12-3456789 would have a password of smit3456.

Protection using 9 (nine) character protection:

·        INDIVIDUAL and CORPORATION — All 9 (nine) character protection will consists of the above character protection, with an underline separating the letters and the numbers. Using the above examples, a password for an INDIVIDUAL using a 9 (nine) character protection would be: smit_6789 and a CORPORATION using a 9 (nine) character protection would be: smit_3456.