The Child Tax Credit May Cut Your Tax

Income Tax Service For Individuals – If you have a child under age 17, the Child Tax Credit may save you money at tax time. Here are some key facts the IRS wants you to know about the credit.
• Amount. The non-refundable Child Tax Credit may help cut your federal income tax by up to $1,000 for each qualifying child you claim on your tax return.
• Qualifications. A child must pass seven tests to qualify for this credit:
1. Age test. The child was under age 17 at the end of 2013.
2. Relationship test. The child is your son, daughter, stepchild, foster child, brother, sister, stepbrother, or stepsister. A child can also be a descendant of any of these persons. For example, your grandchild, niece or nephew will meet this test. Adopted children also qualify. An adopted child includes a child lawfully placed with you for legal adoption.
3. Support test. The child did not provide more than half of his or her own support for 2013.
4. Dependent test. You claim the child as a dependent on your 2013 federal income tax return.
5. Joint return test. A married child can’t file a joint return with their spouse they are filing jointly only to claim a tax refund.
6. Citizenship test. The child must be a U.S. citizen, U.S. national or U.S. resident alien.
7. Residence test. In most cases, the child must have lived with you for more than half of 2013.
• Limitations. Your filing status and income may reduce or eliminate the credit.
• Additional Child Tax Credit. If you get less than the full Child Tax Credit, you may qualify for the refundable Additional Child Tax Credit. This means you could get a refund even if you owe no tax.

We’re here to help! For no obligation free consultation contact us today!
ABA Tax Accounting
info@abataxaccounting.com
(651) 621-5777, (952) 583-9108, (612) 224-2476, (763) 269-5396
http://www.abatax81.blogspot.com
http://www.abataxaccounting.wordpress.com
http://www.abataxaccounting.com

Advertisements

Identity Theft and Tax Returns: Tips for Taxpayers

Federal, State, Local and International Taxes – Refund fraud caused by identity theft is one of the fastest growing crimes nationwide.

Stopping refund fraud related to identity theft is a top priority for the IRS. With more than 3,000 employees working on identity theft cases, the IRS is focused on preventing, detecting and resolving identity theft cases as soon as possible and has trained more than 35,000 employees to work with taxpayers to recognize and provide assistance when identity theft occurs.

Taxpayers might encounter identity theft involving their tax returns in several ways. One possible scenario is where identity thieves try filing fraudulent refund claims using another person’s identifying information, which has been stolen.

We’re here to help! For no obligation free consultation contact us today!
ABA Tax Accounting
info@abataxaccounting.com
(651) 621-5777, (952) 583-9108, (612) 224-2476, (763) 269-5396
http://www.abatax81.blogspot.com
http://www.abataxaccounting.wordpress.com
http://www.abataxaccounting.com

Tax Planning For Small Business Owners

Amare Berhie, Enrolled Agent – Tax planning is the process of looking at various tax options in order to determine when, whether, and how to conduct business and personal transactions to reduce or eliminate tax liability.

Many small business owners ignore tax planning. They don’t even think about their taxes until it’s time to meet with their accountants, but tax planning is an ongoing process and good tax advice is a valuable commodity. It is to your benefit to review your income and expenses monthly and meet with your EA/CPA or tax advisor quarterly to analyze how you can take full advantage of the provisions, credits and deductions that are legally available to you.

Although tax avoidance planning is legal, tax evasion – the reduction of tax through deceit, subterfuge, or concealment – is not. Frequently what sets tax evasion apart from tax avoidance is the IRS’s finding that there was fraudulent intent on the part of the business owner. The following are four of the areas most commonly focused on by IRS examiners as pointing to possible fraud:
• Failure to report substantial amounts of income such as a shareholder’s failure to report dividends or a store owner’s failure to report a portion of the daily business receipts.
• Claims for fictitious or improper deductions on a return such as a sales representative’s substantial overstatement of travel expenses or a taxpayer’s claim of a large deduction for charitable contributions when no verification exists.
• Accounting irregularities such as a business’s failure to keep adequate records or a discrepancy between amounts reported on a corporation’s return and amounts reported on its financial statements.
• Improper allocation of income to a related taxpayer who is in a lower tax bracket such as where a corporation makes distributions to the controlling shareholder’s children.

We’re here to help! For no obligation free consultation contact us today!
ABA Tax Accounting
info@abataxaccounting.com
(651) 621-5777, (612) 224-2476
http://www.abatax81.blogspot.com
http://www.abataxaccounting.wordpress.com
http://www.abataxaccounting.com

Choosing the Right Filing Status

Federal, State, Local and International Taxes – Using the correct filing status is very important when you file your tax return. You need to use the right status because it affects how much you pay in taxes. It may even affect whether you must file a tax return.

When choosing a filing status, keep in mind that your marital status on Dec. 31 is your status for the whole year. If more than one filing status applies to you, choose the one that will result in the lowest tax.

Note for same-sex married couples. New rules apply to you if you were legally married in a state or foreign country that recognizes same-sex marriage. You and your spouse generally must use a married filing status on your 2013 federal tax return. This is true even if you and your spouse now live in a state or foreign country that does not recognize same-sex marriage.

Here is a list of the five filing statuses to help you choose:
1. Single. This status normally applies if you aren’t married or are divorced or legally separated under state law.
2. Married Filing Jointly. A married couple can file one tax return together. If your spouse died in 2013, you usually can still file a joint return for that year.
3. Married Filing Separately. A married couple can choose to file two separate tax returns instead of one joint return. This status may be to your benefit if it results in less tax. You can also use it if you want to be responsible only for your own tax. Head of Household. This status normally applies if you are not married. You also must have paid more than half the cost of keeping up a home for yourself and a qualifying person. Some people choose this status by mistake. Be sure to check all the rules before you file.
4. Qualifying Widow(er) with Dependent Child. If your spouse died during 2011 or 2012 and you have a dependent child, this status may apply. Certain other conditions also apply.
We’re here to help! For no obligation free consultation contact us today!
ABA Tax Accounting
info@abataxaccounting.com
(651) 621-5777, (952) 583-9108, (612) 224-2476, (763) 269-5396
http://www.abatax81.blogspot.com
http://www.abataxaccounting.wordpress.com
http://www.abataxaccounting.com

Tips about Taxable and Nontaxable Income

Income Tax Service For Individuals – Are you looking for a hard and fast rule about what income is taxable and what income is not taxable? The fact is that all income is taxable unless the law specifically excludes it.

Taxable income includes money you receive, such as wages and tips. It can also include noncash income from property or services. For example, both parties in a barter exchange must include the fair market value of goods or services received as income on their tax return.

Some types of income are not taxable except under certain conditions, including:
• Life insurance proceeds paid to you are usually not taxable. But if you redeem a life insurance policy for cash, any amount that is more than the cost of the policy is taxable.
• Income from a qualified scholarship is normally not taxable. This means that amounts you use for certain costs, such as tuition and required books, are not taxable. However, amounts you use for room and board are taxable.
• If you got a state or local income tax refund, the amount may be taxable. You should have received a 2013 Form 1099-G from the agency that made the payment to you. If you didn’t get it by mail, the agency may have provided the form electronically. Contact them to find out how to get the form. Report any taxable refund you got even if you did not receive Form 1099-G.
Here are some types of income that are usually not taxable:
• Gifts and inheritances
• Child support payments
• Welfare benefits
• Damage awards for physical injury or sickness
• Cash rebates from a dealer or manufacturer for an item you buy
• Reimbursements for qualified adoption expenses

We’re here to help! For no obligation free consultation contact us today!
ABA Tax Accounting
info@abataxaccounting.com
(651) 621-5777, (952) 583-9108, (612) 224-2476, (763) 269-5396
http://www.abatax81.blogspot.com
http://www.abataxaccounting.wordpress.com
http://www.abataxaccounting.com

%d bloggers like this: