Time to Review Your Financial Planning?

May 4, 2012 / admin / No comments

If you’ve done any long term financial and estate planning, you probably have set up a life insurance policy, a will, a retirement savings plan and perhaps other instruments to protect your own retirement and your family’s future. But it’s not enough to set up the life insurance, the will, etc., and just check them off your to-do list forever. As time passes, your life circumstances will change, and your estate planning needs will change too.

Every few years (10 years at the most) you should review your financial planning. Read more

Category: Financial Planning, Personal Finance, Retirement Planning / Tags: , , ,

Do You Need to Pay Estimated Taxes?

April 25, 2012 / admin / No comments

If you have income from sources that are not subject to withholding, such as self-employment, interest, dividends, alimony, rent, gains from the sales of assets, prizes or awards, then you may have to pay quarterly estimated taxes.

As a general rule, you must pay estimated taxes in 2012 if both of these statements apply:

  1. You expect to owe at least $1,000 in tax after subtracting your tax withholding (if you have any) and tax credits;
  2. You expect your withholding and credits to be less than the smaller of 90 % of your 2012 taxes or 100 percent of the tax on your 2011 return. Read more
Category: Income Tax, Tax Planning / Tags: , , ,

What Job-related Expenses Can You Deduct?

April 18, 2012 / admin / No comments

Some employees may be able to deduct certain work-related expenses. In order to be qualify for deduction, an expense must be required by your employer. You must be itemizing deductions on IRS Schedule A to qualify, and you may not deduct any expenses which your employer has reimbursed.

Expenses that qualify for an itemized deduction generally include:

• Business travel away from home
• Business use of your car
• Business meals and entertainment 
• Travel
• Use of your home
• Education
• Supplies
• Tools
• Miscellaneous expenses

You must keep records to support all business expenses you deduct. Be sure to keep an ongoing log or record for ongoing expenses such as business mileage. The IRS is much more less to question a regularly maintained log, than a record compiled at the end of the year.

Category: Income Tax, Tax Deductions & Credits / Tags: , , , , , , , ,

If You Can’t Pay Your Taxes On Time

April 10, 2012 / admin / No comments

If you owe tax with your federal tax return, but can’t afford to pay it all when you file, you need to know your options so that you can keep interest and penalties to a minimum.

Here are some tips about late payment of taxes:

1. Filing an extension will not defer your tax liability. Taxes owed must be paid on or before the filing deadline, to avoid interest and penalties for late payment.

2. Pay as much as you can on the filing deadline, whether you are filing your return or an extension. These steps will eliminate the late filing penalty, reduce the late payment penalty and cut down on interest charges. Read more

Category: Income Tax, Tax Compliance, Tax Problems / Tags: , , ,

Qualifying for the Charitable Contribution Deduction

April 2, 2012 / admin / No comments

 Many people make charitable donations in the expectation that they will be able to deduct their donation on their tax return. However, not all donations qualify for the Charitable Contribution Deduction, and not all taxpayers qualify to take it.

To qualify, you must meet 2 basic criteria:

1. You must file Form 1040 and itemize deductions on Schedule A. You cannot deduct contributions if you are not itemizing. 

2. Your donations must be given to qualified organizations. For example, you cannot deduct contributions made to specific individuals, political organizations or candidates. Here’s a table that shows some common types of qualifying and non-qualifying organizations: Read more

Category: Tax Deductions & Credits / Tags: , , ,

Tax Tips for the Self-employed

March 21, 2012 / admin / No comments

If you work for yourself, as an independent contractor, or you carry on a trade or business as a sole proprietor, you are generally considered to be self-employed. Here are five things you need to know about self-employment and self-employment taxes:

1. Self-employment can include work in addition to your regular full-time business activities, such as part-time work you do at home or in addition to your regular job. Note that you cannot work as both an employee on payroll, and an independent contractor, for the same company.

2. If you are self-employed, you generally have to pay self-employment tax as well as income tax. Self-employment tax is a Social Security and Medicare tax primarily for individuals who work for themselves, similar to the Social Security and Medicare taxes withheld from the pay of most wage earners. You can deduct half of your self-employment tax in figuring your adjusted gross income. Read more

Category: Business Taxes, Tax Deductions & Credits / Tags: , , , ,

Claiming the Home Office Deduction

March 14, 2012 / admin / No comments

If you have your own business or work from home for an employer, you may be able to claim the tax deduction for business use of your home. But you can’t just claim any home office as a tax deduction; the criteria are quite specific.

You must use this part of your home regularly and exclusively for business. You can’t claim your family den or dining room for business use just because you sometimes prepare business reports or entertain clients there. Exceptions to the exclusivity rule are in-home day care facilities, and storing business inventory in an area of your home such as a garage.

Your home office must be one of the following:

  • Your principle place of business, or at the very least, the place where you do the administrative work, as long as you have no other place to do this work. Read more
Category: Business Taxes, Tax Deductions & Credits / Tags: , , ,

Education Tax Credits Help Pay Higher Education Costs

March 7, 2012 / admin / No comments

Two federal tax credits may help you offset the costs of higher education for yourself, your spouse, or your dependents.  These are the American Opportunity Credit and the Lifetime Learning Credit.

To qualify for either credit, you must pay higher education tuition and fees for yourself, your spouse or your dependent. The credit may be claimed by either the parent or the student, but not both. If the student was claimed as a dependent, the parent must file for the credit.

For each student, you may claim only one of the credits in a single tax year. For example, you cannot claim the American Opportunity Credit to pay for part of your daughter’s tuition charges and then claim the Lifetime Learning Credit for the rest. However, you can claim one credit for your daughter’s education expenses, and the other for your son’s in the same year. Read more

Category: Education, Tax Deductions & Credits, Uncategorized / Tags: , , , ,

Has your filing status changed?

March 5, 2012 / admin / No comments

Determining your filing status is one of the first steps to filing your federal income tax return. There are five filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household and Qualifying Widow(er) with Dependent Child. Your filing status is used to determine your filing requirements, standard deduction, eligibility for certain credits and deductions, and your correct tax.

Here are the basics of filing status:

  • Your marital status on the last day of the year determines your marital status for the entire year. Read more
Category: Income Tax, Tax Planning / Tags: , , , , ,

What Medical and Dental Expenses Can You Deduct?

February 24, 2012 / admin / No comments

If you, your spouse or dependents had significant medical or dental costs in 2011, you may be able to deduct those expenses when you file your tax return. Here eight things you need to know about medical and dental expenses and other benefits.

1. You must itemize. You deduct qualifying medical and dental expenses only if you itemize deductions on Form 1040, Schedule A.

2. Deduction is limited. You can deduct only medical expenses that exceed 7.5% of your Adjusted Gross Income for the year. Suppose you made $50,000 last year, and paid $4,000 in qualifying medical expenses. 7.5% of $50,000 is $3,750, so you can only deduct the amount in excess of $3,750, or $250 of those expenses.

3. Expenses must have been paid in 2011. You can only include the medical and dental expenses you actually paid during the year, regardless of when the services were provided. Be sure to keep good receipts or records to substantiate your expenses. Read more

Category: Tax Deductions & Credits / Tags: , , ,
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