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.

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.