Mike's weekly post usually concentrated on tax saving strategies.
The kids are out of school and summer is well underway. Make sure you understand the rules regarding the tax deductibility of summer activities and related daycare expenses. Collecting those receipts now can save plenty during tax time:
There has recently been a rash of emails being passed around making all sorts of claims regarding the upcoming increase in Medicare Taxes to pay for Health Care Reform. Much of the content is filled with misleading information. In an effort to clear the air, noted here are some of the common claims and what you need to know regarding those claims.
It is one thing to be taxed on retirement contributions and their related earnings when you withdraw funds from your Traditional IRA during retirement, it is quite another when you pay the tax PLUS a 10% penalty for early withdrawal. Need funds prior to retirement and want to avoid the early withdrawal penalty? There are cases when this can be done:
In an effort to keep taxpayers from transferring wealth from one generation to the next tax-free, there are specific limits to the amount of gifts one may give to any one person each year. Amounts in excess of this limit are subject to a potential gift tax and require filing an annual gift tax form. For most of us, this is not something we need to worry about, but if handled incorrectly it can create quite a surprise when the tax bill is due.
Wouldn’t it be nice to check out of the workforce early and not have to worry about having enough for retirement? While good financial planning can help you get there, leveraging the tax code as part of your retirement plan is also a good idea. Here are some tax tips that could help you reach your early retirement goal.
Quotes from actual IRS correspondence received by clients:
"Thank you for your correspondence. We currently do not have a copy of the correspondence we sent to you regarding your child's tax return."
"Our records show we received a 1040X...for the tax year listed above. We're sorry but we cannot find it."
"Our records show you owe a balance due of $0.00. If we do not receive it within 30 days, appropriate collection steps will be taken".
"Payment is due on your account. Please submit payments on or before June 31 to avoid late payment penalties and interest."
This often overlooked bookkeeping and payroll tax requirement can cause a tangle of tax problems if not handled correctly. It ended a run for Congress by Caroline Kennedy (JFK’s daughter) and killed a U.S. Attorney General nominee’s chances for appointment. Could you be impacted? This is what you need to know.
The trouble with alimony is the differing tax treatment depending on whether you are paying it or receiving it. Throw in the tax treatment of Child Support and the complex calculation of changes in alimony over time and you can quickly have a tax mess on your hands. Here are some tips to help keep things straight.
With continued turmoil in the job market, the number of people searching for work continues to be at a high level. Because of this, the amount of time it takes to find a new job can be long and expensive. Don't overlook the ability to deduct qualified job hunting expenses on your tax return. Here is what you need to know.
There's usually an element of relief after your annual tax return has been filed. But what do you do if you find an error on your tax return? Should you always file an amended return? Here are some things to consider.
Errors discovered that lead to an additional tax obligation are legally required to be fixed by filing an amended tax return. This is especially true if the discovered error is from missing information found on a 1099 form or W-2 reported income. Why? This information is being reported to the IRS and matching programs will typically catch the error. The sooner you amend your return and pay the tax the lower the possible interest and penalties.
Keeping all the filing dates straight when it comes to the tax calendar can be a challenge in the best of times. Add some unique Federal Holidays and you often have a mess on your hands. So what do you need to know?
The Federal Tax Calendar contains some fairly predicable holidays and one or two that can throw you for a loop. Here are the current observed holidays for federal tax purposes in 2012:
| • Jan 2: | New Years Day |
| • Jan 16: | Martin Luther King Jr. |
| • Feb. 20: | Washington's Birthday (President's Day) |
| • April 16: | D.C. Emancipation Day |
| • May 28: | Memorial Day |
| • July 4: | Independence Day |
| • Sept 3: | Labor Day |
| • Oct. 8: | Columbus Day |
| • Nov. 12: | Veterans' Day (observed) |
| • Nov. 22: | Thanksgiving Day |
| • Dec. 25: | Christmas Day |
Those who have gone through or are going through the adoption process know only too well how long it takes and how expensive the process is. According to the 2011 Adoptive Family Survey, adoptions can range in cost from $7,000 to over $50,000!
And, unless Congress acts to change the current tax law, the $12,650 adoption credit available in 2012 will no longer be available beginning in 2013. Here is what you need to know:
The fuse is lit and it continues to burn with a potential "explosion" in tax law changes at the end of 2012. If you wait until the end of the year to plan for these changes it may be too late. Over the course of 2012 a number of tax tips will be provided to help become aware of the possible changes.
Itemized deductions and personal exemptions are common benefits within the tax code that reduce your taxable income. Prior to 2010, there were provisions to phase-out these tax reduction benefits for those whose income surpassed certain thresholds. After 2012, unless Congress acts, your itemized deductions and personal exemptions may once again be phased-out.
With the tax filing due date behind us, those who have not yet received their refund might want to know when it will be processed. If this applies to you, there is a way to check on the status of your refund online. The popular “Where’s My Refund” feature on the IRS web site (www.irs.gov) allows taxpayers to see the status of their refund after filing their income tax return.
If you recently got married, plan to get married, or know someone who is taking the matrimonial plunge, here are some important tax tips every new bride and groom should know.
When the Health Care Reform Act was signed into law it included a number of tax provisions that go into place over the next few years. One of the biggest changes will impact taxpayers who have medical expenses that can be itemized on their tax return.
In order to reduce your taxes by itemizing medical related expenses your qualified medical expenses need to exceed 7.5% of your Adjusted Gross Income (AGI). To the extent your expenses exceed this limit you may reduce your taxable income dollar for dollar. Medical expenses are fairly diverse and include doctor, dentist, chiropractor, prescription drugs, and hospital stays.
Are you Eligible?
Since 1975, the Earned Income Tax Credit (EITC) has provided a tax break to millions of Americans each year. The credit was originally established to give low and medium income taxpayers a break on their Social Security taxes while providing an incentive to work. The EITC is often the subject of missed opportunity as the IRS estimates as many as 20% of taxpayers that qualify for the credit do not include it on their tax return. Here are some things to consider:
Q. Do I have to have children to qualify? Do I have to be married?
A. No. One of the most common errors is thinking the EITC is only for married couples with children. Both single and married taxpayers can qualify for the EITC. Even taxpayers without children may qualify for the credit if they meet certain age and residency requirements. You may NOT, however, file your tax return as "married filing separate" and still receive the credit.
Taxpayers may benefit from plenty of qualifying credits and deductions when filling out tax returns – as long as they operate within the rules. But for those trying to bend the facts to make things more favorable, they may open the door to tax evasion charges, fines and possible time in prison.
It is true that honest mistakes do happen and it can be challenging to keep up with changing tax laws. Just keep in mind that the IRS can be reasonable when issuing tax oversight penalties, but expect intentional attempts to skip paying taxes to be dealt with much more severely.
With nearly 70% of individual tax returns now being filed electronically, many of us take the filing method as a matter of course. And in most instances it is. However, when an e-filed tax return is rejected filing can become more complicated and more important.
