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Jul 122011
 
WASHINGTON - OCTOBER 13:  U.S. President Barac...

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When tax time comes, parents have reason to be happy: there are a number of tax credits and other benefits offered only to parents. Tax professionals are often in the best position to identify those credits and other benefits. In fact, some studies show that parents who consult tax advisers save more than $3,500 on their annual tax bill.

Here are ten of the best tax benefits for parents.

1. Exemptions for Dependents. For every child who qualifies as dependent, parents reduce their taxable income by $3,650 in 2010. With three dependent children, taxable income is reduced by more than $10,000.

2. Child Tax Credit. Dependent children under the age of 17 qualify parents for the Child Tax Credit, which can be as much as $1,000 per child. There are limits on income to receive the full amount, so consult a tax adviser.

3. Child and Dependent Care Credit. Parents with children under age 13 who paid for childcare so they could work are often eligible for this tax credit.

4. Earned Income Tax Credit. Parents who have earned income during the year often qualify for this credit. Rules apply, so consult a tax adviser.

5. Adoption Credit. For parents who adopt a child, this credit can be worth as much as $12,150 depending on the circumstances.

6. Children who Earn Income. It is best to consult a tax adviser regarding whether children earning income need to file tax returns.

7. Investment Income. Depending on the circumstances, a child’s investment income may or may not be taxable at the parent’s tax rate. Parents should consult a tax adviser.

8. Higher Education Tax Credits. Recent tax laws have introduced new and modified existing credits for higher education. For parents whose children no longer qualify for the Child Tax Credit, these Higher Education Tax Credits can be a real boon.

9. Student Loan Interest Deduction. Parents can now deduct any interest they pay on their children’s student loans.

10. Health Insurance Deduction. For self-employed parents, health insurance premiums paid for children up to age 27 can now be deducted.

Barry W. is a fan of science fiction, and when he is not crafting the perfect light sabers with his sons he looks for tips to give to parents to help them deal with the economic situation in the US.

Jul 042011
 
NEW YORK - APRIL 15:  Pedestrians walk by a St...

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Do you want a larger refund on your taxes this year? Follow these tips and increase your refund, avoid penalties from the IRS, and get your money back quicker.

1) You should keep track of your business related mileage. If you have two jobs you can declare the distance from the first job to the second. If you have one job, you can not claim mileage but you can use the mileage to seminars and workshops. You can claim the expenses of taxis, hotels, tips, planes, trains and car rentals on business trips.

2) Do you keep track of all your medical expenses? You have to spend 7.2% of your income for medical costs to count. Keeping records of your medical bills should be a priority. Have a special folder for this area. Try to make uncovered personal medical costs into a business expense.

3) You can claim necessary business meals and entertainment up to 50%, but you can’t claim entertainment for personal reasons, and the IRS will give both you and your employer difficulty if you attempt to.

4) Keep organized records of your expenses. Then, you will be prepared at tax time and will have documentation if the IRS questions something on your return. Your previous income tax returns should be kept in your records.

5) Do you need money back faster? File your income tax electronically. It comes back faster and is checked for errors. Another bonus is you will receive a confirmation of your return.

6) Do not obtain a loan to receive your refund faster. If you are paying someone to do your return, or you are preparing it yourself, it makes sense financially to wait for your money. High interest rates are charged for loans.

7) Make sure your taxes are submitted before the IRS deadline. You can ask for an extension if your prior tax returns were filed properly. Be aware of all IRS deadlines to avoid penalties!

It is an excellent idea to make use of tax breaks and keep good records of your expenses.

Josh T. is an avid reader and in his spare time he helps people with tax questions. When he is not helping others, he works for a tax resolution firm.

 Posted by at 3:54 pm
Jun 232011
 
WASHINGTON - OCTOBER 26:  Internal Revenue Ser...

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Death and taxes may be the only guarantees in life, but the looming fear of a tax audit is nearly as dreadful. Whether you underpaid or overpaid, you want your audit to go as smoothly as possible. The following tips will help you see that it does:

1. Keep data organized. You will need to gather your chart of accounts, sales invoices, corporate books, sales tax returns, profit and loss report, and any other financial records relevant to your business. Always keep your documentation accurate and up to date. This will ensure that should you need to review those items again, there will be no difficulty finding them.

2. Allow plenty of time for the audit. A sales tax audit is a tedious prolonged affair. The auditor will not be able to accurately gauge the time necessary to perform his function until the audit is well underway. Make sure that your staff is prepared to be without you as you need to make yourself as available to the auditor as possible. If you have adequate notice, training a temporary replacement would be advisable.

3. Leave it to the professionals. You may find it necessary to consult with professionals who can help you navigate the sales tax audit waters. If you are feeling completely overwhelmed and unequal to the task, professional IRS audit help can organize your information and prepare you and your staff for the audit process. Click here for more information about professional IRS audit help.

4. Less than appealing. You may find that the results of your recent audit leave a lot to be desired. If that’s the case, you may want to consider an appeal. If you choose to appeal, you must be certain that your claims are easily defendable by documentation. Prepare yourself for a long term battle as the appeals process involves a more close analysis of your papers.

5. Is your appeal the right appeal? Be mindful of which dispute resolution you attempt. If you are unsure which to choose, you may want to reconsider the need for a tax consultant. You need never feel lost in the audit process.

Annette is a tax guru that likes to help people with tax issues. She works for a company that provides tax resolutions services to give you advice on what you need to fend off tax nightmares. Visit toptaxdefenders.com to learn more.

May 262011
 
The emblem of the American Recovery and Reinve...

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In addition to offering a green source of providing utilities to your home, solar panels also are offer a sizable tax benefit to the homeowner. The federal government gives a sizable tax break and many state governments have tax benefit programs in place.

The federal program is under the American Recovery and Reinvestment Act and is detailed within the Consumer Energy Tax Incentives under Residential Renewable Energy Tax Credits. The clause states, “Consumers who install solar energy systems (including solar water heating and solar electric systems), small wind systems, geothermal heat pumps, and residential fuel cell and microturbine systems can receive a 30% tax credit for systems placed in service before December 31, 2016; the previous tax credit cap no longer applies.”Simplified this program allows for 30% of the system cost to be credited without a cost cap. It is available only on your new and existing primary residence and a second home. No credit may be taken on a rental unit. The expiration date is December 31, 2016. Your system must provide electricity to the residence and meet fire and electrical code requirements

To apply for credits on products placed in service, file the 2011 IRS Form 5695 and include it with your 2011 taxes when filed with the IRS on or before April 15, 2012. On your 1040 form the residential energy tax credit is reported and claimed on line 52 using figures from Form 5695. Save all associated receipts and also the Manufacturer’s Certification Statement for your own records. Submit IRS Form 5695 with your taxes.

Many state government also have tax credits available to qualifying residences and homes. There are differing qualifications from the federal credits so ask the solar installers in your area for information on credits and the application process. Most installers or solar sales companies will have this information and can help you with the qualification process Take the time to research the state tax website for details as well.

Josh T. is an avid reader and in his spare time he helps people with tax questions. When he is not helping others, he works for a tax resolution firm.

 

 Posted by at 11:00 am
Apr 202011
 
Landlord?

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For all landlords who are contemplating renting their property to prospective tenants, there can be specific tax incentives involved. Many potential landlords think that the only benefit to renting is the rent itself, but that’s a misnomer. Substantial tax write-offs can be an even better reason for investing in rental property. Items that can legitimately be claimed on a landlord’s tax return are:

[1.] Property improvements

Although normally a landlord cannot deduct property improvements all in a single year, it is possible to take depreciation and recover those improvement costs over a period of 27.5 of those property rental years. In addition, though, some of those home improvement costs could be technically earmarked as simply rental property repairs, and they may be written off during the year that the improvements or repairs are performed.

[2.] Credit Card interest

If a credit card is utilized to pay for repairs or services provided for any tenant, the interest charged is a deductible item.

[3.] Landlord’s home office

A landlord can deduct any expenses related to a home office, based upon a percentage of the home used as a home office.

[4.] Expenses for local business travel

Local business travel includes driving to a rental property for repairs, improvements or simply responding to a tenant complaint, as well as travel to and from stores for the purpose of purchasing supplies. The auto or truck used for these activities can be written off via one of the following means –

A. Real costs such as automobile repairs and fuel.
B. The flat allowable cost per each deductible mile of 58.5¢. This rate should not be used, however, if business expenditure depreciation was previously claimed for that tax year.

[5.] Theft or Casualty Loss

If rental property has been destroyed or damaged, the total loss minus any insurance coverage may be claimed as a deduction.

[6.] Travelling long distances

With appropriate record-keeping, this includes hotel, meals, airfare for business related to being a landlord.

[7.] Do not rent to friends or family

A landlord could lose all possible tax deductions by renting to friends or family members.

Mr. Washa had only $15 to his name when he came to America in the late 1960’s, he is now an accomplished building superintendent in the city of Los Angeles.

 Posted by at 8:38 am
Apr 012011
 
Property market

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Local governments oversee the operation and maintenance of important public services and facilities. Funding for these facilities come, in a large part, from property taxes. Without these critical funds, many services, such as recreational areas, roads, libraries, waste disposal and treatment, and fire departments, would be unavailable to the public.

Annually, the governing boards of these local facilities and services will analyze and decide upon a budget for their needs. After budget approval, a tax rate is figured by dividing the current tax pool by an assessed value of the given jurisdiction. Some states and municipalities use a flat-rate method known as millage tax or millage rate. Under this system, taxes are assessed as $1 for every $1000 of the property’s assessed value.

A property’s assessed value is based on current market value of the property. Other factors, such as condition, location, recent area growth, and recent sales prices of nearby property are taken into consideration as well. If a property owner feels their assessed value is too high, they can request a series of Residential Property Tax Appeals through local administrative offices or the local assessor’s office (Click here to learn more). In addition to this, each state sets an assessment rate used to calculate taxes due.

With the assessed value, assessment rate, and tax rate, it is simple to figure out the taxes due for a property. As an example, we will assume a property value of $145,000, with an assessment rate of 9% and a property tax rate of 23%. The first step is to multiply the assessed value of $145,000 by the assessment rate of 9%, resulting in a total of $13,050. Next, multiply this total by the current property tax rate, in this case 23%, resulting in a final total due of approximately $3001.

Property taxes are due annually, typically around September or October. Failure to pay any taxes due may result in fines and penalties, according to local and state laws. In the event that taxes remain delinquent for an extended period, most local municipalities have laws and processes in place for the seizure and sale of property to reclaim debts owed by individuals. However, using services and tax credits available in their area, most property owners can prevent these events from occurring. Currently, approximately 75 percent of states offer credits and exemptions to households that meet various criteria.


Adele Rigo enjoys time with her family and friends, she works for a property tax protest firm in Houston, she loves crafting and hiking. Contact him at his website for more information.