Tag Archive for Form 1040

What Has Jeeves Got To Do With Taxes?

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If you know Jeeves, he is the fictional character in the series of humorous (read rib-tickling funny) short stories by P.G. Wodehouse. Jeeves is a very, very capable valet who gets his employer, Wooster out of many a sticky situation.

My father introduced me to P.G.Wodehouse’s books and there was no turning me back after that. The brilliant comic genius’ writing has kept me enthralled through long train rides, boring summer afternoons, quick breaks in the midst of grueling exams, you get the drift!

Now we may not all be able to afford a Jeeves in our lives, but a very common trend these days is to hire a nanny or an “au pair” if one has small gifts. Considering the sky-rocketing Read more

Important Date For Taxpayers Living Abroad

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If you are a U.S. citizen or resident alien living and working (or on military duty) outside the United States and Puerto Rico, June 15, 2015 is the filing due date for your 2014 income tax return and to pay any tax due. If your return has not been completed and you need additional time to file your return, file Form 4868 to obtain 4 additional months to file. Then, file Form 1040 by October 15, 2015. However, if you are a participant in a combat zone, you may be able to further extend the filing deadline (see below).

Caution: This is not an extension of time to pay your tax liability, only an extension to file the return. If you expect to owe, estimate how much and include your payment with the extension. If you owe taxes when you do file your extended tax return, you will be liable for both the late payment penalty and interest from the due date. Read more

How To Account For Social Security And Medicare Tax On Unreported Tip Income

Tips word in white 3d letters on a background of hundred dollar bills in cash money as a bonus, thank you or appreciation of excellent service

If you work in an industry where it is customary to receive a portion of your income from customer tips, you are required to pay Social Security and Medicare taxes on those earnings. However, it is only possible to pay these taxes during the year if you report your tip income to your employer. If you receive cash and charge tips of $20 or more per month from any one job, you are required to report these to your employer. If you did not report all of these tips to your employer, you are required to report and pay the additional Social Security and Medicare taxes that should have been paid on these unreported tips. This you do as follows:

• You must complete Form 4137, Social Security and Medicare Tax on Unreported Tip Income. This form is used to calculate the tax in these unreported tips. Read more

How To File For An Extension


If you believe that you will not be able to file your tax return by the due date (generally April 15) you can apply for an automatic six-month extension of time to file, by filing Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. With the 6-month extension, you must file your tax return by October 15.

It is very important to note that when you file for an extension, you are only requesting an extension of time to file, and NOT an extension of time to pay. Therefore, you have an obligation to make an accurate estimate of your tax liability for the year, and pay the amount due by regular due date (April 15). If you do not pay the taxes due, you could be hit with a penalty. Read more

Automatic Extension Request of Time to File Personal Income Taxes: IRS Form 4868

Economic downfall

Income tax forms and payment are due AGAIN. Don’t sweat it, file IRS Form 4868 today!

Remember this is an Automatic 6 month Extension Request for time to file IRS Form 1040 only.

It is not an extension of time to pay your federal and (where applicable) state income taxes.  You are always best served estimating your tax liability and paying that liability in full to the US Treasury as well as with most all states on or before April 15th. If you cannot pay what you estimate you owe, STILL FILE IRS FORM 4868 to secure your automatic extension request.


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The IRS Has Special Rules For Vehicle Donations

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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

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

Rules For Taking A Dependency Exemption

successful businessman considers test

It would seem that the issue of whether a person can be a dependent on your 1040 would be a fairly simple issue.  However, that is not the case.  The IRS has some very precise rules regarding who may be claimed as a dependent and the circumstances under which they may be claimed.

The first test that must be met for any person to be claimed as a dependent is the citizenship or resident test.  This test simply states that the person being claimed as a dependent must be a United States citizen or a resident of the United States, Canada, or Mexico for some part of the year.  A non-resident may not be claimed as a dependent regardless of the support you provide or your relationship to that person. Read more

5 Biggest, Best Homeowner Tax Breaks – Get Them While They Are Still Here!

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Leaving off deductions you’re eligible for, such as mortgage interest and property taxes, is leaving money on the table and with tax reform revving up again on Capitol Hill, with the heads of key committees pledging to work toward a simpler and fairer tax code, Congress may be looking to tradeoff these tax breaks with lower tax rates. Sounds intriguing?

Homeownership can pay off big time if you itemize your deductions. Use these five tax breaks to cut what you owe Uncle Sam:

1. Home Office

Do you work at home? Collect a tax break either by using the simplified method explained below or doing some complicated calculations to claim your exact home office expenses. Read more

Business Expenses For A Minister


In the course carrying out ministerial duties, a minister will incur various expenses that are related to his or her occupation. Some of these may be reimbursed by the employer, while others may be the expense of the minister. What is the criteria for reimbursing or deducting legitimate business-related expenses?

Whether an expense is reimbursed by the employer or if it falls on the minister to pay, the same IRS guidelines apply. An expense must be “ordinary” and “necessary under IRS rules. Business expenses do not include capital expenses such as a computer or other equipment. However, these may be depreciated in most cases. Personal expenses are not deductible business expenses. Read more

What Is The Best Business Structure To Form? If Any…

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What I love most about Colorado, more than the 300+ days of sun every year and the glorious rocky mountains, are the people. For the most Coloradans are risk taking job creators, starting new businesses from scratch out of their garages and turning passions for a hobby into a business with a profit motive.

Of course I surround myself with these people that live and play outside their comfort zone and quite often I am asked about the nuanced tax law implications of starting a new business. Specifically what might be the most appropriate business structure to form, if any, so I’ve decided to draft a post about this topic for general edification. Hopefully you find these words helpful. Read more