Ca

O

Cri

\\41 .

With the
dreaded season
upon us,
two CPAs
advise that
you still have
time to
lower your
1996 tax payment.

BILL MCCUE

SPECIAL TO THE JEWISH NEWS

I

t's tax preparation time, and while
tax professionals may be hard
pressed to field their own telephone
calls for the next few months, be as-
sured that they are all getting even
busier by the week.
We all want to pare down that tax bur-
den, especially the self-employed who suf-
fer an even higher tax level than those of
us with steady jobs. Whether we hire a
pro or are one of those confident souls
who prefer handling our own exemptions,
deductions and credits, here's a glance at
some of the changes and opportunities
available for both 1996 and 1997.
To lighten the bite of your 1996 taxes
which are due Tuesday, April 15, certi-
fied public accountant and attorney Jef-
frey Kaplan of Kaplan, Katzman and
Aaron, P.C. in Southfield suggests an-
other look at retirement contributions,
namely the IRA (Individual Retirement
Account).
Mr. Kaplan explains, "Many IRAs are
funded with nondeductible contributions.
Still, for a long-term investment, the IRA
is very attractive because its growth is
accomplished tax deferred until the mon-
eys are withdrawn after age 59 1/2. For
self-employed individuals, contributions
larger than those allowed to IRAs can be

Bill McCue is a Detroit area freelance
writer.

`. .*,•:w.***4

made into a Keough plan account or a ical savings accounts (MSAs) are anoth-
Self-Employed Plan called an SEP-IRA er hot topic for the self-employed and for
employers with 50 or fewer work-
account.
Jeffrey
ers. Those who qualify will combine
"While a Keough account must be
Kaplan: high deductible medical coverage
opened by Dec. 31 of the tax year, Lag-minute
(a $1,500 to $2,250 deduction for
a SEP-IRA account can be opened
advice.
singles and $3,000 to $4,500 for
for the '96 tax year until April 15
families) with contributions to an IRA-
of this year."
Sharon H. Snover, a CPA in Southfield, like account.
Mr. Kaplan explains, "Participants can
points out, "Total IRA contribution ley-
els for a married couple, with one spouse have no other comprehensive health in-
who had no compensation, went from surance except Medicare and a few oth-
$2,250 last year to as much as $4,000 for er specified types of limited-scope
1997. The contribution limit for each con- insurance coverage. The appeal here is
tributor rose to $2,000." that instead of just a 40 percent de-
For those who are interested in de- ductibility only for the self-employed, 65
ducting a home office expense, both Mr. percent of MSA contributions are de-
Kaplan and Ms. Snover consider the ductible for individuals, up to $2,250, and
move a red flag for the Internal Revenue 75 percent is deductible for a participat-
Service to conduct an audit. Neverthe- ing family up to $3,375.
"On the down side," he says, "there is
less, Ms. Snover advises, "If a home of-
Lice is the taxpayer's only place of a cap nationally that will allow partici-
business, it's certainly a legitimate ex- pation by only the first 750,000 Ameri-
cans to sign up. Also, the program is
pense.
"As part of that, the taxpayer will want mandated only through the year 2000,
to include the appropriate proportion of although those already participating will
their home utilities, including part of be able to continue on.
"And if this weren't already complex
their water bills, in that deduction."
Ms. Snover adds, "Another change for enough, nowhere near all the questions
the self-employed is an increase in the are answered on implementing this in-
deductibility of health insurance costs volved new pilot program from Congress.
from 30 percent in 1996 to 40 percent for "Still, on the up side, MSA funds will
1997."
Mr. Kaplan says that for 1997, med- TIPS page 62

