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The American Recovery and Reinvestment Act (ARRA) of 2009 was signed into law by President Obama on February 17, 2009. The bill is intended to provide a stimulus to the U.S. economy in the wake of the economic downturn. The bill includes federal tax cuts, expansion of unemployment benefits and other social provisions such as domestic spending in education, health-care, and infrastructure-including the energy sector. It sets forth both short-term and long-term legislation to restore economic growth, create jobs and strengthen the American middle class. But what does it mean to you? Here are some key highlights of the tax relief for individuals: Payroll Checks Increase This Spring. The "Making Work Pay" Tax Credit will mean an additional $400 to $800 for many Americans. New withholding tax tables have been issued for employers, thereby increasing paychecks. This credit, however, begins to phase out for single taxpayers with an AGI of... read more

The IRS offers free tax help to members of the military and their families. The Volunteer Income Tax Assistance program has help sites both on and off base. This includes VITA sites to help our military overseas. Here are five tips to know about free tax help for the military: 1. Armed Forces Tax Council. The Armed Forces Tax Council oversees the military tax programs offered worldwide. AFTC partners with the IRS to do outreach to the military. This includes the Air Force, Army, Coast Guard, Marine Corps and Navy. 2. Trained volunteers. IRS-trained volunteers staff the military VITA sites. They receive training on military tax issues, like tax benefits for service in a combat zone. The staff can help you with special extensions of time to file your tax return and to pay your taxes or with special rules that apply to the Earned Income Tax Credit. You can also get help with the new health care law tax provisions. 3. What to bring. Take the following records... read more

The Internal Revenue Service today reminded taxpayers who are unable to complete their tax returns on time that it’s easy to get more time to file their return. In fact, it can even be done online. For taxpayers who haven’t yet filed their taxes, the IRS has this advice: don’t panic. Taxpayers who need more time to complete their tax return can request an automatic six-month extension.    The fastest and easiest way to get the extra time is through the Free File link on IRS.gov. In a matter of minutes, anyone, regardless of income, can use this free service to electronically request an extension on Form 4868. Filing this form gives taxpayers until Oct. 15 to file a return. To get the extension, taxpayers must estimate their tax liability on this form and should also pay any amount due. The IRS cautions taxpayers that a request for an extension will give extra time to file a tax return; not extra time to pay any taxes owed. By filing either a... read more

The Internal Revenue Service today reminded taxpayers who are unable to complete their tax returns on time that it’s easy to get more time to file their return. In fact, it can even be done online. For taxpayers who haven’t yet filed their taxes, the IRS has this advice: don’t panic. Taxpayers who need more time to complete their tax return can request an automatic six-month extension.    The fastest and easiest way to get the extra time is through the Free File link on IRS.gov. In a matter of minutes, anyone, regardless of income, can use this free service to electronically request an extension on Form 4868. Filing this form gives taxpayers until Oct. 15 to file a return. To get the extension, taxpayers must estimate their tax liability on this form and should also pay any amount due. The IRS cautions taxpayers that a request for an extension will give extra time to file a tax return; not extra time to pay any taxes owed. By filing either a... read more

If you adopted or tried to adopt a child in 2014, you may qualify for a tax credit. If your employer helped pay for the costs of an adoption, you may be able to exclude some of your income from tax. Here are some things you should know about adoption tax benefits. Credit or Exclusion. The credit is nonrefundable. This means that the credit may reduce your tax to zero. If the credit is more than your tax, you can’t get any additional amount as a refund. If your employer helped pay for the adoption through a written qualified adoption assistance program, you may qualify to exclude that amount from tax. Maximum Benefit. The maximum adoption tax credit and exclusion for 2014 is $13,190 per child. Credit Carryover. If your credit is more than your tax, you can carry any unused credit forward. This means that if you have an unused credit in 2014, you can use it to reduce your taxes for 2015. You can do this for up to five years, or until you fully use the credit,... read more

Many people who carry on a trade or business are self-employed. Sole proprietors and independent contractors are two examples of self-employment. If this applies to you, there are a few basic things you should know about how your income affects your federal tax return. Here are six important tips about income from self-employment: SE Income. Self-employment can include income you received for part-time work. This is in addition to income from your regular job. Schedule C or C-EZ. 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. SE Tax. You may have to pay self-employment tax as well as income tax if you made a profit. Self-employment tax includes Social Security and Medicare taxes. Use Schedule... read more

The Internal Revenue Service is reminding individuals with home-based businesses filling out their 2014 federal income tax returns that they can choose a simplified method for claiming the deduction for business use of a home. In tax year 2012, the most recent year for which figures are available, nearly 3.4 million taxpayers claimed deductions of more than $10 billion for business use of a home, which is commonly referred to as the home office deduction. Introduced in tax year 2013, the optional deduction is designed to reduce the paperwork and record-keeping burden for small businesses. The optional deduction is capped at $1,500 per year, based on $5 a square foot for up to 300 square feet. Normally, home-based businesses are required to fill out a 43-line form (Form 8829) often with complex calculations of allocated expenses, depreciation and carryovers of unused deductions. Instead, taxpayers choosing the simplified method need only complete a short worksheet... read more

The Internal Revenue Service recently reminded taxpayers planning to claim charitable donations to make sure they have the records they need before filing their 2014 tax returns. For any taxpayer, keeping good records is key to qualifying for the full charitable contribution deduction allowed by law. In particular, this includes insuring that they have received required statements for two contribution categories—each gift of at least $250 and donations of vehicles. First, to claim a charitable contribution deduction, donors must get a written acknowledgement from the charity for all contributions of $250 or more. This includes gifts of both cash and property. For donations of property, the acknowledgement must include, among other things, a description of the items contributed. In addition, the law requires that taxpayers have all acknowledgements in hand before filing their tax return. These acknowledgements are not filed with the return but must be retained by the... read more

You can reduce your taxes and save on your energy bills with certain home improvements. Here are some key facts that you should know about home energy tax credits: Non-Business Energy Property Credit Part of this credit is worth 10 percent of the cost of certain qualified energy-saving items you added to your main home last year. This may include items such as insulation, windows, doors and roofs. The other part of the credit is not a percentage of the cost. This part of the credit is for the actual cost of certain property. This may include items such as water heaters and heating and air conditioning systems. The credit amount for each type of property has a different dollar limit. This credit has a maximum lifetime limit of $500. You may only use $200 of this limit for windows. Your main home must be located in the U.S. to qualify for the credit. Be sure you have the written certification from the manufacturer that their product qualifies for this... read more

Beginning on Jan. 1, 2015, the standard mileage rates for the use of a car, van, pickup or panel truck are: 57.5 cents per mile for business miles driven, up from 56 cents in 2014 23 cents per mile driven for medical or moving purposes, down half a cent from 2014 14 cents per mile driven in service of charitable organizations These optional standard mileage rates are used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile, including depreciation, insurance, repairs, tires, maintenance, gas and oil. The rate for medical and moving purposes is based on the variable costs, such as gas and oil. The charitable rate is set by law. Taxpayers always have the option of claiming deductions based on the actual costs of using a vehicle rather than the standard mileage rates. A... read more

If you are a low-to-moderate income worker, you can take steps now to save two ways for the same amount. With the saver's credit you can save for your retirement and save on your taxes with a special tax credit. Here are five tips you should know about this credit: 1. Save for retirement. The formal name of the saver's credit is the retirement savings contributions credit. You may be able to claim this tax credit in addition to any other tax savings that also apply. The saver's credit helps offset part of the first $2,000 you voluntarily save for your retirement. This includes amounts you contribute to IRAs, 401(k) plans and similar workplace plans. 2. Save on taxes. The saver's credit can increase your refund or reduce the tax you owe. The maximum credit is $1,000, or $2,000 for married couples. The credit you receive is often much less, due in part because of the deductions and other credits you may claim. 3. Income limits. Income limits vary based on your... read more

Federal income tax refunds totaling $1 billion may be waiting for an estimated one million taxpayers who did not file a federal income tax return for 2011, the Internal Revenue Service announced today. To collect the money, these taxpayers must file a 2011 tax return with the IRS no later than Wednesday, April 15, 2015. "Time is running out for people who didn’t file a 2011 federal income tax return to claim their refund," said IRS Commissioner John Koskinen. "People could be missing out on a substantial refund, especially students or part-time workers. Some people may not have filed because they didn’t make much money, but they may still be entitled to a refund.” The IRS estimates half of the potential refunds for 2011 are more than $698. In cases where a tax return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. For 2011 tax returns, the window closes on April 15, 2015. If no return... read more

Did you pay for college in 2014? If you did it can mean tax savings on your federal tax return. There are two education credits that can help you with the cost of higher education. The credits may reduce the amount of tax you owe on your tax return. Here are some important facts you should know about education tax credits. American Opportunity Tax Credit: You may be able to claim up to $2,500 per eligible student. The credit applies to the first four years at an eligible college or vocational school. It reduces the amount of tax you owe. If the credit reduces your tax to less than zero, you may receive up to $1,000 as a refund. It is available for students earning a degree or other recognized credential. The credit applies to students going to school at least half-time for at least one academic period that started during the tax year Costs that apply to the credit include the cost of tuition, books and required fees and supplies.   Lifetime... read more

Welcome 2015! As the new year rolls around, it's always a sure bet that there will be changes to current tax law and 2015 is no different. From health savings accounts to retirement contributions and standard deductions, here's a checklist of tax changes to help you plan the year ahead. Individuals For 2015, more than 40 tax provisions are affected by inflation adjustments, including personal exemptions, AMT exemption amounts, and foreign earned income exclusion, as well as most retirement contribution limits. For 2015, the tax rate structure, which ranges from 10 to 39.6 percent, remains the same as in 2014, but tax-bracket thresholds increase for each filing status. Standard deductions and the personal exemption have also been adjusted upward to reflect inflation. For details see the article, "Tax Brackets, Deductions, and Exemptions for 2015," below. Alternative Minimum Tax (AMT) Exemption amounts for the AMT, which was made permanent... read more

More than 40 tax provisions, including the tax rate schedules, and other tax changes are adjusted for inflation in 2015. Let's take a look at the ones most likely to affect taxpayers like you. The tax rate of 39.6 percent affects singles whose income exceeds $413,200 ($464,850 for married taxpayers filing a joint return), up from $406,750 and $457,600, respectively. The other marginal rates--10, 15, 25, 28, 33 and 35 percent--and the related income tax thresholds are described in the revenue procedure. The standard deduction rises to $6,300 for singles and married persons filing separate returns and $12,600 for married couples filing jointly, up from $6,200 and $12,400, respectively, for tax year 2014. The standard deduction for heads of household rises to $9,250, up from $9,100. The limitation for itemized deductions to be claimed on tax year 2015 returns of individuals begins with incomes of $258,250 or more ($309,900 for married couples filing jointly). The personal exemption... read more

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 IRS-granted coverage exemption on the return. Use the worksheet in the Form 8965 Instructions to calculate the shared responsibility payment. Form 8962, Premium Tax Credit Complete this form to reconcile advance payments of the premium tax credit, and to claim this credit on the tax return. Additionally, if individuals purchased coverage... read more

Starting with this year's filing season, taxpayers must report certain information related to health care coverage on their 2014 tax return when they file this April. In addition, taxpayers must provide proof of health insurance coverage or that they have received an exemption. With that in mind, let's take a look at how the Affordable Care Act might affect your tax situation, and based on your type of coverage, which new tax forms you might be receiving.   Overview The biggest change for most taxpayers is found on Line 61 of Form 1040, where individuals must either check a box to show they had health insurance or pay a penalty. In general, the penalty applies to individuals who did not have health insurance for more than three months in 2014. In 2014, the penalty is the greater of one percent of modified adjusted gross income or $95 per adult ($47.50 per child under age 18, up to a maximum of $285 per family). While the IRS cannot issue a lien against you... read more

A recent IRS Notice of Deficiency was sent to Joseph D. Scully, Jr. requiring him to pay additional tax, fines and penalties of $26,000 for a three period. This case was resolved in the U. S. Tax Court for an amount approximate to what the IRS was seeking. The main problem appears to be one that many of us have trouble with, lack of consistency. We all start out with good intentions, but over time, appointments, disorganization, forgetfulness and finally abandonment of your record keeping can occur. This is a problem that happens to many business owners and when it happens to a 501c(3) entity it can have even worse ramifications than fines and penalties, it can lead to possible revocation for failing to follow IRS code or for private benefit/inurement infractions.       The top five issues that occur with deductions are:  1. Stated business purpose is nonspecific or completely omitted      This generally occurs... read more

It is important to have someone that is trained and certified in the day to day procedures, management, direction, and processing of payroll. A common misconception is payroll consist of only printing checks. Maybe, you are asking yourself what is evolved in payroll?    Find A System Monitor First, you have to find a system to monitor and track the time of your employees.  You have to decide if that system will be electronic or manual.  You know manual...you still enter your time into a printed timesheet.  A more accurate choice would be electronic processing. Electronic processing involves the use of a time clock or a kiosk machine, and your employees can log in and out to track time. Gather All Time Cards And/Or Electronic Entries Second, gather all time cards or electronic entries and forward to manager, ect to verify the hours reported by the employee is correct. You will have to make corrections and changes... read more

The IRS have opened up form 8863 Education Credit and you can file that form now. Many other credits are still not ready and taxpayers await these in order to file. What is my opinion as a tax professional for 26 year? See below. TAX PLANNING: It is perfectly legal to plan your tax affairs to your advantage as long as you don't break Tax Law. Many people don't know this. Some avoid tax professionals, claiming that they file their own taxes yearly... WORD OF ADVICE----when you are sick you visit a doctor, when you car needs repairs you take it to the mechanic---Trust me if you don't take your taxes to a seasoned tax preparer , I guarantee you that you are losing out on solid TAX PLANNING ADVICE ... Food for thought.

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