This year Congress passed Health Care legislation providing advantages for nearly every individual and small business. Not all of these changes take effect this year, so check through our list below and talk to your CPA about the provisions that effect your situation.
American Opportunity and Lifetime Learning Credits Help Pay Education Costs
This year, there are two federal tax credits available to help Americans meet the costs of higher education. These credits, the American Opportunity Credit and the Lifetime Learning Credit, are available to both individuals and their dependents.
Many Americans find that tax season is one of the most stressful times of the year. By simply preparing early you can relieve that stress, knowing you’re ready to move forward. Proper documentation is the key to doing so. The steps below will help you to get ready. And, if you’re ready, you might find yourself filing early. As a result, while others struggle to meet the tax deadline, you could be enjoying Spring with a refund in hand.
We recently ran across an article by consumer education writer Christopher Pascale comparing the services of H & R Block with those of a CPA. Pascale comes to the conclusion that trying to get convenient tax preparation is costing Americans a lot of money.
According to Pascale, "the best advice comes from people who are trying to build a business on a foundation of hard work and credibility", and that "even at the highest rates, a CPA is cheaper than filing through H&R Block.”
In a move meant to reduce fraud and improve the quality of tax preparation services across the board, the IRS is finally regulating tax preparers. Anyone taking money to prepare taxes for another will be required to register with the IRS, meet minimum competency through testing, and must continue their tax preparation education.
The IRS simply doesn't have the resources for human oversight and scrutiny over every tax return. Instead, the IRS uses computers to look for returns that show certain traits that are similar to returns that have been audited and adjusted in the past. Returns with those triggers are marked for human oversight.
If your income and deductions are legitimate and documented, don't be afraid to claim what's rightfully yours. That being said, the top ten triggers are described below.
By law, you have until April 15 (April 18 this year) to pay taxes on your income from the previous year. But, you could incur a penalty if you don't make payments throughout the year. If you'll owe more than $1,000 in taxes by the end of the year, you may be subject to the penalty.
Tax reform, especially simplifying the tax code and closing loop-holes, has been tauted as a means to fix the U.S. economy and reduce tax frustration across the board. But, what would tax reform look like?
Last December, Federal Reserve Chairman Ben Bernanke, while speaking to "60 Minutes", described the tax code simply as "inefficient". He suggested that closing loopholes and lowering rates would increase the efficiency of the tax code and create more incentives for people to invest.
The tax code is a complex body of ever changing documents. Deductions and credits are phased in and phased out. Qualifications and restrictions are modified. It's more than most of us can keep up with, and that's especially true for business owners who, frankly, have better things to do with their time than learn the tax code.
Many people who venture out on their own to start a business find that the tax rates are high for the self-employed. And, 15.3% does seem high, but you get to deduct half of your self-employment taxes from your net income. The self-employment tax works like a business expense and you are allowed to deduct it accordingly. In addition, you don't pay self-employment taxes on your gross income. You only pay self-employment tax on your net business income - and then on only 92.3% of it.
The tax code is a complex body of ever changing documents. Deductions and credits are phased in and phased out. Qualifications and restrictions are modified. It's more than most of us can keep up with, and that's especially true for business owners who, frankly, have better things to do with their time than learn the tax code.
