Archive for Individual

Filing An Amended Tax Return

If subsequent to filing your tax return, you discover that errors were made, you should file an amended tax return to correct these errors. Naturally, this corrective information will alter your tax calculations. The following are some of the typical errors you can make on your tax return:

• You did not report all of your income. For example, you received a W-2 with additional income, which arrived after you filed your original return.
• You claimed deductions or credits on your original tax return that you were not eligible for, and need to remove them.
• Conversely, you subsequently discovered that you did not claim all the deductions or credits you should have claimed, and need to include them. Read More

Written by | Posted in Income Tax • Individual

April 2015 Individual Due Dates

April 1 – Last Day to Withdraw Required Minimum Distribution

Last day to withdraw 2014’s required minimum distribution from Traditional or SEP IRAs for taxpayers who turned 70½ in 2014. Failing to make a timely withdrawal may result in a penalty equal to 50% of the amount that should have been withdrawn. Taxpayers who became 70½ before 2014 were required to make their 2014 IRA withdrawal by December 31, 2014.

April 10 –  Report Tips to Employer

If you are an employee who works for tips and received more than $20 in tips during March, you are required to report them to your employer on IRS Form 4070 no later than Read More

Written by | Posted in Individual • Tax Tips

Paying Too Much Or Too Little In Taxes? First Look At Your Withholdings

Are you an early filer or do you like to wait? I guess some of that depends on whether you are getting money back or you owe! When my clients owe money to the government and we have gone down every route there could possibly be to reduce their taxes, I remind them about their missed October tax planning appointment and we usually look at their withholdings.

An employer requires you to give them information on how much tax needs to be withheld from your paycheck. Based on the information that is provided to them, the employer then proceeds to withhold & submit income taxes on your behalf to the Internal Revenue Service. This information from you is obtained by means of the Form W-4. Read More

Written by | Posted in Individual

You Could Be A Big Loser If You Don’t Itemize All Your Expenses

The government affords all taxpayers a standard deduction from their incomes. This deduction naturally decreases your taxable income, and the amount you are entitled to, is based on your filing status. However, if your total eligible deductible expenses exceed the standard deduction amount, you may be allowed to itemize your deductions. Also, you must itemize if you do not qualify for the standard deduction. Itemized deductions are comprised of certain eligible expenses that individual taxpayers in the United States can report on their federal income tax returns in order to decrease their taxable income. Most taxpayers are allowed a choice between the itemized deductions and the standard deduction.

To claim your itemized deductions, you must complete Schedule A, Itemized Deductions. Read More

Written by | Posted in Individual

What You Should Know About The AMT

Even if you’ve never paid Alternative Minimum Tax (AMT), before, you should not ignore this tax. Why? Because your tax situation might have changed and this might be the year that you need to pay AMT. AMT attempts to ensure that taxpayers who claim certain tax benefits pay a minimum amount of tax. You may have to pay this tax if your income is above a certain amount.

Here’s what you should know about the AMT:

1. When AMT applies. Your filing status and income determine the amount of your exemption. You may have to pay the AMT if your taxable income, plus certain adjustments, is more than your exemption amount. In most cases, if your income is below this amount, Read More

Written by | Posted in Individual

Can You Take the Earned Income Tax Credit?

Since 1975, the Earned Income Tax Credit has helped workers with low and moderate incomes get a tax break each year. Four out of five eligible workers claim EITC. Wondering if you can too? Here’s what you should know about this valuable credit:

1. Review your eligibility. If you worked and earned under $52,427 in 2014, you may qualify for the EITC. If your financial or family situation has changed, you should review the EITC eligibility rules because you might qualify for the EITC this year even if you didn’t in the past. If you qualify for the EITC you must file a federal income tax return and claim the credit to get it. This is true even if you are not otherwise required to file a tax return.

2. Know the rules. Before you claim the EITC, you need to understand the rules to be sure Read More

Written by | Posted in Income Tax • Individual

The IRS Has Special Rules For Vehicle Donations

From time-to-time, nonprofit organizations may be donated a vehicle, boat, or airplane as a charitable contribution.  The IRS realized that this was an area in which taxpayers were abusing the law, often taking a deduction far in excess of the actual value of the vehicle being donated.  For example, in one instance a vehicle was ready for the junk pile but the donor gave it to a charitable organization. Based on the Kelley Blue Book Value it had a fair market value of $1,200, which the donor used as a charitable contribution deduction on his Form 1040.  So several years ago, more restrictive rules were put in place in regard to the amount that may be deducted as a charitable contribution.

The long-standing rule for non-cash charitable contributions states that any such contribution valued in excess of $500 must be reported on Form 8283 and included Read More

Written by | Posted in Individual • IRS • Non-Profit Tax

Receive Your Refund Faster With Direct Deposit

Don’t wait around for a paper check. Have your federal (and state, if applicable) tax refund deposited directly into your bank account. Selecting Direct Deposit is a secure and convenient way to get your money into your pocket more rapidly.

Speed – When combining e-file with direct deposit, the IRS will likely issue your refund in no more than 21 days.

Security – Direct deposit offers the most secure method of obtaining your refund. There is no check to lose. Each year, the U.S. Post Office returns thousands of refund checks to the IRS as undeliverable mail. Direct deposit eliminates undeliverable mail and is also the best way to guard against having a tax refund check stolen. Read More

Written by | Posted in Federal • Income Tax • Individual

Health Care Law: Changes to IRS Tax Forms

This year, there are some changes to tax forms related to the Affordable Care Act. Along with several new lines on existing forms, there are also two new forms that need to be included with some tax returns.

While most taxpayers simply need to check a box on their tax return to indicate they had health coverage for all of 2014, there are new lines on Forms 1040, 1040A, and 1040EZ related to the health care law. Information about the new forms and updates to existing forms is summarized below

Form 8965, Health Coverage Exemptions

Complete this form to report a Marketplace-granted coverage exemption or claim an Read More

Written by | Posted in Affordable Healthcare Act • Income Tax • Individual • IRS

It’s Tax Time! Are You Ready?

If you’re like most taxpayers, you find yourself with an ominous stack of “homework” around TAX TIME! Pulling together the records for your tax appointment is never easy, but the effort usually pays off in the extra tax you save! When you arrive at your appointment fully prepared, you’ll have more time to:

• Consider every possible legal deduction;
• Evaluate which income reporting and deductions are best suited to your situation;
• Explore current law changes that affect your tax status;
• Talk about tax-planning alternatives that could reduce your future tax liability.

Choosing Your Best Alternatives

Read More

Written by | Posted in Individual • IRS • Tax Deductions • Tax Planning • Tax Tips

Need For Greater Tax Literacy And Regulation of Preparers

I was shocked by the March 13, 2015 IRS release warning individuals to chose their tax professional carefully. The IRS found that some “unscrupulous preparers” instructed their clients to make individual shared responsibility payment directly to the preparer! That is stealing!

I fault the clients, preparers and the complex system.

The IRS has tried to regulate all return preparers but been held up by a need for a statute change that Congress will have to address (see quick summary from IRS on this). Of course, truly unscrupulous people will still find a way around the law.

So, more is needed to educate individuals about the tax system so they better understand Read More

Written by | Posted in Individual • Tax Tips
« Older Entries   Recent Entries »