Back-to-School Tips for Students and Parents Paying College Expenses

Federal, State, Local and International Taxes – Whether you’re a recent high school graduate going to college for the first time or a returning student, it will soon be time to head to campus, and payment deadlines for tuition and other fees are not far behind.

The IRS offers some tips about education tax benefits that can help offset some college costs for students and parents. Typically, these benefits apply to you, your spouse or a dependent for whom you claim an exemption on your tax return.

  • American Opportunity Credit. This credit, originally created under the American Recovery and Reinvestment Act, is still available for 2012. The credit can be up to $2,500 per eligible student and is available for the first four years of post secondary education at an eligible institution. Forty percent of this credit is refundable, which means that you may be able to receive up to $1,000, even if you don’t owe any taxes. Qualified expenses include tuition and fees, course related books, supplies and equipment.
  • Lifetime Learning Credit. In 2012, you may be able to claim a Lifetime Learning Credit of up to $2,000 for qualified education expenses paid for a student enrolled in eligible educational institutions. There is no limit on the number of years you can claim the Lifetime Learning Credit for an eligible student.

You can claim only one type of education credit per student in the same tax year. However, if you pay college expenses for more than one student in the same year, you can choose to take credits on a per-student, per-year basis. For example, you can claim the American Opportunity Credit for one student and the Lifetime Learning Credit for the other student.

  • Student loan interest deduction. Generally, personal interest you pay, other than certain mortgage interest, is not deductible. However, you may be able to deduct interest paid on a qualified student loan during the year. It can reduce the amount of your income subject to tax by up to $2,500, even if you don’t itemize deductions.

These education benefits are subject to income limitations, and may be reduced or eliminated depending on your income. For more information contact us today for no obligation free consultation.

ABA Tax Accounting

Amare Berhie, Senior Tax Accountant

amare@abataxaccounting.com

612-282-3200

866-936-0430 Toll free

http://www.abataxaccounting.com

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How To Setup QuickBooks to share with another computer

QuickBooks Accounting – To allow the sharing of your QuickBooks file, your best option is to have a computer network in place. This network will provide the foundation for you to then share the file between two or more computers. You can have either a wired or wireless network within your office. 

It is also possible to take a backup copy of the QuickBooks file from one computer and restore it to a second computer to allow sharing of the information. However, I don’t recommend this if both computers will be entering QuickBooks data. If you do this, you won\’t know who has the most recent copy of the data file, and things can get messed up quite easily. Your best bet is to talk to a local computer consultant about a network for your home or office. For no obligation free consultation contact us today!

ABA Tax Accounting

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QuickBooks Accounting Services

Ability To Refocus On Your Bottom Line

Reliable U.S. Based Outsourcing Solutions – By outsourcing non core activities you are effectively realigning your whole accounting firm’s operations towards activities that help grow your business. Whether this would be product development, sales, services and other activities, having an outsourcing partner that will drive non-core activities for you will help you achieve your targets and improve your bottom line. For more info or to explore possibilities please contact us today.

ABA Tax Accounting

Amare Berhie, Managing Member

amare@abataxaccounting.com

612-282-3200

866-936-0430 Toll free

http://www.abataxaccounting.com

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Offer-in-Compromise Help Taxpayers Make a Fresh Start

Tax Problems – The IRS has expanded its “Fresh Start” initiative by offering more flexible terms to its Offer-in-Compromise Program. These newest rules enable some financially distressed taxpayers to clear up their tax problems even quicker. 

An offer-in-compromise (OIC) is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. An OIC is generally not accepted if the IRS believes the liability can be paid in full as a lump sum or through a payment agreement. The IRS looks at the taxpayer’s income and assets to determine the reasonable collection potential. 

This expansion of the “Fresh Start” initiative focuses on the financial analysis used to determine which taxpayers qualify for an OIC. For more information on the “Fresh Start” initiative contact us today to get a free consultation!

ABA Tax Accounting

Amare Berhie, Tax Advisor

amare@abataxaccounting.com

612-282-3200

866-936-0430 Toll Free

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Why Outsource?

Low Cost U.S. Based Outsourcing Solutions – Business process outsourcing (BPO) should be an indispensable strategy for any type of business or government seeking new ways to achieve better results by controlling costs, reducing risk, fostering collaboration and increasing transparency. For more info or to explore possibilities please contact us today.

ABA Tax Accounting

Amare Berhie, Managing Member

amare@abataxaccounting.com

612-282-3200

866-936-0430 Toll free

http://www.abataxaccounting.com

www.abatax81.blogspot.com

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Have you received an IRS audit notification?

IRS Audit Representation – The IRS leaves no stone unturned in its mission to determine the accuracy of your tax return. If you don’t comply with the Auditors’ wishes, the IRS will recalculate your tax and send you home with a hefty tax bill as your parting gift. . If you’ve received an audit notice from the IRS, don’t hesitate to contact us for no obligation free consultation. We’re here to help!

ABA Tax Accounting

Amare Berhie, Tax Advisor

amare@abataxaccounting.com

612-282-3200

866-936-0430 Toll Free

www.abataxaccounting.com

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Reduction in expenditures

Low Cost U.S. Based Outsourcing Solutions – Do you want to build up your revenue, reduce your expenses and expand your capabilities at the same time? One of the biggest reasons why businesses seek an outsourcing partner is in order to lower overhead costs and expenses. Immediate savings to the client are derived from the vendor’s lower cost in wages, benefits, and operational expenses. For more info or to explore possibilities please contact us today.

ABA Tax Accounting

Amare Berhie, Managing Member

amare@abataxaccounting.com

612-282-3200

866-936-0430 Toll free

www.abatax81.blogspot.com

www.abataxaccounting.wordpress.com

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Tips to Reduce Big Refunds and Prevent Tax Bills

Federal, State, Local and International Taxes – The Internal Revenue Service reminds taxpayers that it’s not too late to adjust their 2012 tax withholding to avoid big tax refunds or tax bills when they file their tax return next year. 

Taxpayers should act soon to adjust their tax withholding to bring the taxes they must pay closer to what they actually owe and put more money in their pocket right now. 

Most people have taxes withheld from each paycheck or pay taxes on a quarterly basis through estimated tax payments. Each year millions of American workers have far more taxes withheld from their pay than is required. Many people anxiously wait for their tax refunds to make major purchases or pay their financial obligations. The IRS encourages taxpayers not to tie major financial decisions to the receipt of their tax refund – especially if they need their tax refund to arrive by a certain date. 

Here is some information to help bring the taxes you pay during the year closer to what you will actually owe when you file your tax return. 

Employees

  • New Job – When you start a new job your employer will ask you to complete Form    W-4, Employee’s Withholding Allowance Certificate. Your employer will use this form to figure the amount of federal income tax to withhold from your paychecks. Be sure to complete the Form W-4 accurately.
  • Life Event You may want to change your Form W-4 when certain life events happen to you during the year. Examples of events in your life that can change the amount of taxes you owe include a change in your marital status, the birth of a child, getting or losing a job, and purchasing a home. Keep your Form W-4 up-to-date.

You typically can submit a new Form W–4 at anytime you wish to change the number of your withholding allowances. However, if your life event results in the need to decrease your withholding allowances or changes your marital status from married to single, you must give your employer a new Form W-4 within 10 days of that life event. 

Self-Employed

  • Form 1040-ES. If you are self-employed and expect to owe a thousand dollars or more in taxes for the year, then you normally must make estimated tax payments to pay your income tax, Social Security and Medicare taxes. You can use the worksheet in Form 1040-ES, Estimated Tax for Individuals, to find out if you are required to pay estimated tax on a quarterly basis. Remember to make estimated payments to avoid owing taxes at tax time.

For no obligation free consultation contact us today!

ABA Tax Accounting

Amare Berhie, Senior Tax Accountant

amare@abataxaccounting.com

612-282-3200

866-936-0430 Toll free

http://www.abataxaccounting.com

www.abatax81.blogspot.com

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Correctly reporting rental real estate

Federal, State, Local and International Taxes – Individuals who are not real estate professionals are generally subject to passive activity loss limitations even if they materially participate in the rental.

Real estate professionals report rental real estate activities in which they materially participated as non-passive. But, real estate professionals who do not materially participate in the rental activity are generally subject to passive activity loss limitations.

For more information contact us today for no obligation free consultation!

ABA Tax Accounting

Amare Berhie, Senior Tax Accountant

amare@abataxaccounting.com

612-282-3200

866-936-0430 Toll free

http://www.abataxaccounting.com

www.abatax81.blogspot.com

www.abataxaccounting.wordpress.com

Tips for Taxpayers Who Receive an IRS Notice

Federal, State, Local and International Taxes – Receiving a notice from the Internal Revenue Service is no cause for alarm. Every year the IRS sends millions of letters and notices to taxpayers. In the event one shows up in your mailbox, here are things you should know.

  • Don’t panic. Many of these letters can be dealt with very simply.
  • There are a number of reasons the IRS sends notices to taxpayers. The notice may request payment of taxes, notify you of a change to your account or request additional information. The notice you receive normally covers a very specific issue about your account or tax return.
  • Each letter and notice offers specific instructions on what you need to do to satisfy the inquiry.
  • If you receive a notice about a correction to your tax return, you should review the correspondence and compare it with the information on your return.
  • If you agree with the correction to your account, usually no reply is necessary unless a payment is due.
  • If you do not agree with the correction the IRS made, it is important that you respond as requested. Respond to the IRS in writing to explain why you disagree. Include any documents and information you wish the IRS to consider, along with the bottom tear-off portion of the notice. Mail the information to the IRS address shown in the lower left corner of the notice. Allow at least 30 days for a response from the IRS.
  • Most correspondence can be handled without calling or visiting an IRS office. However, if you have questions, call the telephone number in the upper right corner of the notice. When you call, have a copy of your tax return and the correspondence available.
  • Keep copies of any correspondence with your tax records.

For more information about IRS notices and bills contact us today for no obligation free consultation!

ABA Tax Accounting

Amare Berhie, Senior Tax Accountant

amare@abataxaccounting.com

612-282-3200

866-936-0430 Toll free

http://www.abataxaccounting.com

www.abatax81.blogspot.com

www.abataxaccounting.wordpress.com

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