by Marketing | Jun 24, 2016 | Tax Tips
Did you know that you can claim a federal income tax credit when you pay someone to care for your kids while you’re at work or school? The Child and Dependent Care Credit is valuable because it reduces the amount of tax you owe dollar-for-dollar. Here’s an overview of the rules.
- Child care expenses must be work-related. This requirement means you have to pay for child care so you can work or actively look for work. If you’re married, you and your spouse must both work. Exceptions to this “earned income” rule include spouses who are full-time students or who are not able to care for themselves due to mental or physical limitations.
- Expenses generally must be paid for care of your under-age-13 child. However, expenses you pay to care for a physically or mentally disabled spouse or adult dependent may also count.
- Expenses must be paid to someone who is not your dependent. Amounts you pay your spouse, your child’s parent (such as an ex-spouse), anyone claimed as a dependent on your tax return, or your own child age 18 or younger do not qualify for the credit. For example, if you pay your 17-year-old dependent child to watch a younger sibling, that expense doesn’t count for purposes of claiming the credit.
- The care provider has to be identified on your tax return. You’ll typically need to show the name, address, and taxpayer identification number. You can request this information by asking your provider to complete Form W-10, Dependent Care Provider’s Identification and Certification.
- The amount you can claim depends on how much you spend for the care up to a dollar limit of $3,000 of expenses for one dependent and $6,000 for two or more dependents.
by Marketing | Jun 9, 2016 | Tax Tips
Check your advance payments of the premium tax credit.
Did you choose to reduce your monthly health insurance premium by having advance payments of your federal income tax credit sent to your insurance company? If you’re getting married this summer, having a baby, or changing jobs, you need to estimate the impact of those events on the advance payments. Otherwise you may end up with a surprise in the form of a smaller refund or a required repayment next year when you file your federal income tax return.
by Marketing | Jun 6, 2016 | Security
The latest credit cards have a new feature: a half-inch square on the card’s face that looks like a mini circuit board. The square is a small computer chip called an EMV. The acronym stands for Europay, MasterCard, and VISA, the developers of the technology. Over the next several years, these chip-embedded cards are expected to replace the familiar magnetic strip technology on cards that you now swipe at point-of-sale devices. When you use your EMV card, you’ll need to “dip,” or insert, it into a new type of reader.
Why the change? The new chips are expected to improve credit and debit card security. Data on cards with the older technology is much easier for crooks to steal because the information on the magnetic strip is static and can be copied. As a result, a thief can use your card for multiple fraudulent transactions. Cards with the new chip are different. Every time you use an EMV card, the chip creates a unique transaction code. As a result, the newer cards aren’t as useful to counterfeiters and card thieves.
by Marketing | Jun 1, 2016 | Tax Tips
June 30, 2016, is the deadline for filing the 2015 Form 114, Report of Foreign Bank and Financial Accounts, known as the FBAR. Not sure if you need to file? The general rule is that a return is due when you have a financial interest in, or signature authority over, foreign financial accounts if the aggregate value of those accounts exceeds $10,000 at any time during the calendar year. The requirement applies to both individuals and entities such as trusts and businesses, and you may need to file even if your foreign account produces no income.
Be aware that June 30, 2016, is a “hard” deadline. Your 2015 Form 114 must be filed electronically with the Treasury Department no later than that date. No filing extension is available for 2015 forms – even if you filed an extension for your federal income tax return.
How to respond to an IRS notice
If you find yourself on the IRS mailing list, here’s what to do.
- Scan the heading. The first line, generally printed in bold type and centered beneath your name and address, will tell you why the IRS is contacting you. Questions about missing information, additional taxes owed, or payments due mean you’ll want to take prompt action to avoid more notices or assessments of interest and penalties.
- Review the discrepancy. You’ll find the tax form and the year to which the notice applies printed in the upper right corner. Pull out your copy of the corresponding tax return, along with the supporting documents, and compare what you filed with what the IRS is questioning.
- Prepare your explanation. Are the proposed changes correct? Did the IRS misapply a payment? Whatever the issue, there’s usually no need to file an amended return. However, the IRS typically wants a response, either by phone or mail, in order to clear the notice from your account.
- Do not delay. Ignoring IRS correspondence will not make it go away. Reply to the IRS in a timely manner even if you don’t have all the information being requested.
Please contact us if you receive a notice from the IRS, or your state or local taxing authority. We’re here to set your mind at ease by helping you resolve the matter as quickly as possible.
by Marketing | Apr 1, 2016 | Tax Tips
Monday, April 18, is the deadline for filing certain returns and taking certain tax-related actions. Here are the major deadlines.
- Filing 2015 income tax returns for individuals. If you cannot file your return by this deadline, be sure to file an extension request by April 18. The automatic extension (you don’t need to explain to the IRS why you need more time) gives you until October 17, 2016, to file your return. An extension does not, generally, give you more time to pay taxes you still owe. To avoid penalty and interest charges, taxes must be paid by April 18.
- Filing 2015 partnership returns for calendar-year partnerships.
- Filing 2015 income tax returns for calendar-year trusts and estates.
- Filing 2015 annual gift tax returns.
- Making 2015 IRA contributions.
- Paying the first quarterly installment of 2016 individual estimated tax.
- Amending 2012 individual tax returns (unless the 2012 return had a filing extension).
- Original filing of 2012 individual income tax return to claim a refund of taxes. Some taxpayers have tax refunds due them for prior years, and unless a return is filed to claim the refund by the three-year statute of limitations, the refund is lost forever.
by Marketing | Mar 30, 2016 | Tax Tips
In 2013, the IRS issued regulations clarifying when tangible real and personal business property can be expensed. The regulations provided safe harbors that let you deduct certain costs you’d otherwise have to capitalize. For example, using a de minimis safe harbor, you could elect to deduct individual capital expenditures of $500 or less if your business did not have an “applicable financial statement.” (In general, an applicable financial statement is a financial statement based on a certified audit by an accounting firm.) Effective beginning with 2016 taxable years, this safe harbor has increased to $2,500 per invoice or item. In addition, the IRS says it will not contest similar treatment in audits of earlier years.
