It's hard to believe, but 2003 begins my 10th year in business. A few of you started out even earlier than that with me. Either as a client of my former employer, or as a tax client whose return I prepared on the side, while I was still employed. I started my practice primarily doing accounting software support. From that I have grown to more of a traditional accounting practice. Along the way I have hired 2 outstanding employees, whom many of you know, Sandi and Kathy.

My goal is to provide my clients quality service for a reasonable price. I also want to maintain a friendly, helpful atmosphere. To me, my clients are my most important asset. My business has grown entirely by referrals. I do not advertise at all.

Many of you are receiving this newsletter by e-mail. My last e-newsletter was such a success that I am considering that my primary method of communication for news and updates. It's certainly easier and faster for me. From the feedback I got from you, it looks like you would prefer to receive updates by e-mail too. If you are receiving this newsletter by mail and would like to be on the e-mail list, please make sure I have your current e-mail address.

My website is up and running. I hope you will check it out. I'm at llhcpa.com (in big letters that's LLHCPA.COM, just so you get the correct spelling). Many thanks to Jake Sheffield for a wonderful design.

Tax season is in full swing and what better time to share some tax tips. If would like more information on any of these topics, please call me.

Since interest rates continue to stay at the lowest rates in 30 years, refinancing a principal residence remains an attractive option for many. Some of the costs in refinancing may be deductible on your tax return.

Generally, the "points" paid to obtain a home mortgage may be deductible as mortgage interest. Points paid to obtain an original home mortgage can be, depending on circumstances, fully deductible in the year paid. However, points paid solely to refinance a home mortgage usually must be deducted over the life of the loan.

For a refinanced mortgage, the interest deduction for points is determined by dividing the points paid by the number of payments to be made over the life of the loan. This information is usually available from lenders. The deduction for points is only available for those payments made in the tax year.

However, if part of the refinanced mortgage money was used to finance improvements to the home and if the taxpayer meets certain other requirements, the points associated with the home improvements may be fully deductible in the year the points were paid. Also, if a homeowner is refinancing a mortgage for a second time, the balance of points paid for the first refinanced mortgage may be fully deductible at pay off.

Other closing costs - such as appraisal fees and other non-interest fees - generally are not deductible, but can be added to the cost basis of the house. Additionally, the amount of Adjusted Gross Income can affect the amount of deductions that can be taken.

If you paid someone to care for a child or a dependent so you could work, you may be able to reduce your tax by claiming the credit for child and dependent care expenses on your federal income tax return. This credit is available to people who, in order to work or to look for work, have to pay for child care services for dependents under age 13. The credit is also available if you paid for care of a spouse or a dependent of any age who is physically or mentally incapable of self-care.

To claim the credit for child and dependent care expenses, you must meet the following conditions:

• You must have earned income from wages, salaries, tips, or other employee compensation. If you are married, both you and your spouse must have earned income, unless one spouse was either a full-time student or was physically or mentally incapable of self-care.

• The payments for care cannot be paid to someone you can claim as your dependent on your return or to your child who is under age 19.

• Your filing status must be single, head of household, qualifying widow(er) with a dependent child, or married filing jointly.

• The care must have been provided for one or more qualifying persons identified on the form you use to claim the credit.

• You (and, if you're married, your spouse) must maintain a home that you live in with the qualifying child or dependent.

What is a "qualifying" child or dependent? The child must have been under age 13 when care was provided and you must be able to claim the child as an exemption on your tax return. A spouse who is mentally or physically unable to care for himself or herself also qualifies. A dependent of any age who is physically or mentally incapable of self-care also qualifies if the person can be claimed as an exemption on your tax return (or could have been claimed, except for the fact that the person had $3,000 or more of gross income).

To claim the credit, you'll need to provide the name, address and taxpayer identification number of the care provider. If the provider is an individual, you need the Social Security number. If it's a business, you need the provider's employer identification number.

There are some limitations on the amount of credit you can claim. If you received dependent care benefits from your employer, other rules apply.

Radial Keratotomy (RK) is a deductible medical expense and is not considered "cosmetic" surgery. The procedure is considered medical care because it corrects a physical defect. This also applies to PRK and Lasik surgery.

In a 2002 Revenue Ruling the IRS acknowledged that obesity is a medical problem. Consequently, certain payments for a weight-loss program as a specific treatment for a disease or diseases (including obesity) are considered medical expenses. The cost of purchasing diet food is not deductible, neither are weight-loss program costs if you are not considered obese.

The medical costs associated with both of these issues are deductible on your individual return as itemized deductions, subject to 7.5% of your adjusted gross income. They also qualify as medical expenses if your employer has a medical reimbursement plan or other welfare benefit plan.

If there are topics you would like to see addressed in future newsletters, please let me know. As always, thanks for your continued business. Feel free to share this newsletter with friends, family or business associates.