Category Archives for "Taxes"

Check Tax Withholding Now to Avoid Surprises at Tax Time

Each and every year I see a handful of clients that are more shocked than surprised at how much they may owe at time time. I tell them to start thinking about tax consequences for the following year right after I finish the current year return! Below is a tax tip from the IRS that may answer a few questions and I recommend you make any necessary changes now so you have that shocked look at year end!

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How to Handle an IRS Letter or Notice

Tax notices have always evoked panic with many of my clients. One thing you have to remember is many of these notices are “auto generated” and not always up to date or even accurate. If you receive a notice – you may be expecting it. As the tip below reads….do not panic. Many times you can call the IRS, I would suggest any day during the week except for Monday or Friday, and inquire about your notice. Depending on the agent you get – many of these notices can be taken care of right over the phone!

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Summer Newlyweds Should Also Think About Taxes

One thing many married couples may not think about after “tying the knot” is what steps they should take regarding taxes.  In years past I have received a host of questions such as “should I change my exemptions,” “should we file married or married filing separately?”  Below is an IRS tax tip that may answer […]

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Five Facts about the Small Business Health Care Tax Credit

If you are a small employer, there is a tax credit that can put money in your pocket. The small business health care tax credit benefits employers that:
• offer coverage through the small business health options program, also known as the SHOP marketplace
• have fewer than 25 full-time equivalent employees
• pay an average wage of less than $50,000 a year
• pay at least half of employee health insurance premiums
Here are five facts about this credit:
• The maximum credit is 50 percent of premiums paid for small business employers and 35 percent of premiums paid for small tax-exempt employers.
• To be eligible for the credit, you must pay premiums on behalf of employees enrolled in a qualified health plan offered through a Small Business Health Options Program Marketplace, or qualify for an exception to this requirement.
• The credit is available to eligible employers for two consecutive taxable years beginning in 2014 or later. You may be able to amend prior year tax returns to claim the credit for tax years 2010 through 2013 in addition to claiming this credit for those two consecutive years.
• You can carry the credit back or forward to other tax years if you do not owe tax during the year.
• You may get both a credit and a deduction for employee premium payments. Since the amount of your health insurance premium payments will be more than the total credit, if you are eligible, you can still claim a business expense deduction for the premiums in excess of the credit. For more information, see the small business health care tax credit page on IRS.gov.

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Landscapers and Gardeners:

The IRS recognizes Small Business Week May 1–7 by highlighting some of its most popular educational products, videos and webinars to help your small business thrive. If you are a self-employed landscaper or gardener, be sure to view the IRS webinar “Business Taxes for the Self-Employed: The Basics.” Here are some topics included in the webinar or on IRS.gov that you should know:
Accounting Method. An accounting method is a set of rules about when to report income and expenses. Many small businesses use the cash method. Under the cash method, you normally report income in the year that you receive it and deduct expenses in the year that you pay them. Find out more in IRS Publication 538, Accounting Periods and Methods.
Business Taxes. There are four general types of business taxes. They are income tax, self-employment tax, employment tax and excise tax. You may need to pay self-employment tax as well as income tax if you make a profit. Self-employment tax includes Social Security and Medicare taxes. With estimated tax payments, you pay taxes at various times during the year to ensure you don’t have a large tax bill when you file your tax return. Use IRS Direct Pay, the fast, easy and secure way to pay from your checking or savings account.
Tax Forms. There are two forms to report self-employment income. You must file a Schedule C, Profit or Loss from Business, or Schedule C-EZ, Net Profit from Business, with your Form 1040. You may use Schedule C-EZ if you had expenses less than $5,000 and meet other conditions. See the form instructions to find out if you can use the form. Use Schedule SE, Self-Employment Tax, to figure your SE tax. If you owe this tax, make sure you file the schedule with your federal tax return.
Allowable Deductions. You can deduct expenses you paid to run your business that are both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and proper for your trade or business. View the webinar “Small Business Owners: Get All the Tax Benefits You Deserve” to learn more.
Business Use of a Vehicle. If you use your car or truck for your business, you may be able to deduct the costs to operate the vehicle for the business use. Refer to IRSPublication 463, Travel, Entertainment, Gift, and Car Expenses for details.

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Save on Your Taxes and for Retirement with the Saver’s Credit

If you contribute to a retirement plan, like a 401(k) or an IRA, you may be able to claim the Saver’s Credit. This credit can help you save for retirement and reduce the tax you owe. Here are some key facts that you should know about this important tax credit:

Formal Name. The formal name of the Saver’s Credit is the Retirement Savings Contribution Credit. The Saver’s Credit is in addition to other tax savings you get if you set aside money for retirement. For example, you may also be able to deduct your contributions to a traditional IRA.
Maximum Credit. The Saver’s Credit is worth up to $4,000 if you are married and file a joint return. The credit is worth up to $2,000 if you are single. The credit you receive is often much less than the maximum. This is partly because of the deductions and other credits you may claim.
Income Limits. You may be able to claim the credit depending on your filing status and the amount of your yearly income. You may be eligible for the credit on your 2015 tax return if you are:
Married filing jointly with income up to $61,000
Head of household with income up to $45,750
Married filing separately or a single taxpayer with income up to $30,500
Other Rules. Other rules that apply to the credit include:
You must be at least 18 years of age.
You can’t have been a full-time student in 2015.
No other person can claim you as a dependent on their tax return.
Contribution Date. You must have contributed to a 401(k) plan or similar workplace plan by the end of the year to claim this credit. However, you can contribute to an IRA by the due date of your tax return and still have it count for 2015. The due date for most people is April 18, 2016.
Form 8880. File Form 8880, Credit for Qualified Retirement Savings Contributions, to claim the credit.
Free File. If you can claim the credit, you can prepare and e-file your tax return for free using IRS Free File. The tax software will do the hard work for you. It will do the math and complete the right forms. Free File is available only through the IRS.gov website.
Use the Interactive Tax Assistant interview tool to help you determine if you qualify to claim the Retirement Savings Contributions Credit.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

Additional IRS Resources:

Filing Your Taxes
IRS Tax Map
Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs)
IRS YouTube Video:

Welcome to Free File – English

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