Tax Return Preparation

Posted on 17/02/201617/03/2018Categories TaxTags   Leave a comment on Tax Return Preparation

During a tax return preparation interview, getting a client’s information is a tremendous opportunity to find out the concerns of the client

During a tax return preparation interview, getting a client’s information is a tremendous opportunity to find out the concerns of the client and how you can help.

The assistance you give can sometimes provide a life-changing benefit during tax return preparation to the client while enabling your client to decease their tax base.

Tax Return Preparation In-Person Interview:

The tax return preparation in-person interview is quite important to getting a tax return prepared. However, most tax returns are now prepared without an interview. Many clients simply mail or email their information. However, for the clients that we do meet with, the interview becomes a document collection process.

While chatting with clients, many of us ask what would be considered financial-planning questions. These questions can lead to opportunities for additional services. For clients you do not meet with in person, you can still ask what’s going on during a phone call or two.

Many of the questions we ask during tax return preparation have to do with saving taxes by suggesting tax beneficial investment alternatives. For instance, clients in high brackets with a large amount of taxable interest should consider tax-free government bonds or repaying their mortgage if they still have one. Clients with unrealized capital losses or concentrated portfolios could learn about ways to realize these or diversify without substantially altering their investment allocations while decreasing risk. Those with children in college could be told how to maximize college cost tax breaks. Clients who give large cash donations should be presented with noncash alternatives such as donating appreciated securities.

How the tax return preparation interview proceeds depends on how you value your time and your appreciation of what you can do for the client. You can spend the hour helping your clients open envelopes or by providing “free” personalized financial guidance. You should make your clients understand how they are spending their money for your time. During the interview, be interested in the client, ask what they are concerned about, and really listen. Get the client to articulate what they care about and what “keeps them awake.”

Another feature of the tax return preparation interview is to ask questions about the current year and then suggest the benefits of a current year projection to give a heads up of what they might owe or to discuss some tax-planning moves.

I use the questions to determine if there is interest in additional information. If there is, I will send a follow-up article, blog or fact sheet a few days after the interview. I then follow this up after tax season to see if they should come in for a consultation. Sending the info and making the follow-up calls indicate the scope of our expertise in areas concerning our clients.

There are many opportunities during a tax return preparation interview to help the client, showcase the range of your expertise, and generate added revenue. Do not miss the opportunities that are there.

For itemizers IRS has set a tax-filing date of Feb. 14

Posted on 04/02/201106/07/2020Categories TaxTags , , , , , , , , , , , , , ,   Leave a comment on For itemizers IRS has set a tax-filing date of Feb. 14

For itemizers IRS has set a tax-filing date of Feb. 14

Taxpayers who claim itemized deductions will be able to file their federal tax returns starting Feb. 14, the IRS said Thursday.While the tax-filing season began on Jan. 4, the IRS announced last year that taxpayers who itemize — which includes just about everyone who has a mortgage — would have to wait until at least mid-February to file.

The IRS said the delay was necessary because it needed more time to program its systems to accommodate tax breaks included in the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010.

The legislation, which was signed into law Dec. 17, extended the Bush tax cuts through 2012. It also extended a number of expiring tax breaks, including the state and local sales tax deduction, higher education tuition and fees deduction, and educator expenses deduction.

Those who will have to wait until Feb. 14 to file their federal returns include:

•Taxpayers who claim itemized deductions on Schedule A. Itemized deductions include mortgage interest, charitable deductions, medical and dental expenses, and state and local taxes.

•Taxpayers who claim the educator expense deduction. This deduction allows teachers to deduct up to $250 in out-of-pocket costs for classroom materials. It’s an “above-the-line” deduction, which means taxpayers don’t have to itemize to claim it.

•Taxpayers who claim a deduction for their tuition and fees. This is also an above-the-line deduction.

Parents and students who claim other education credits, including the American Opportunity Tax Credit and Lifetime Learning Credit, will not have to wait to file, assuming they don’t itemize.

Gustavo A Viera CPA

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Tax Changes for Small Businesses

Posted on 04/02/201106/07/2020Categories TaxTags , , , , , , , , , , , , , , ,   Leave a comment on Tax Changes for Small Businesses

Tax Changes for Small Businesses

During 2010, new laws, such as the Affordable Care Act and the Small Business Jobs Act of 2010, created or expanded deductions and credits that small businesses and self-employed individuals should consider when completing their tax returns and making business decisions in 2011.

Health Insurance Deduction Reduces Self Employment Tax

With the enactment of the Small Business Jobs Act of 2010, self-employed taxpayers who pay their own health insurance costs can now reduce their net earnings from self-employment by these costs. Previously, the self-employed health insurance deduction was allowed only for income tax purposes. For tax year 2010, self-employed taxpayers can also reduce their net earnings from self employment subject to SE taxes on Schedule SE by the amount of self-employed health insurance deduction claimed on line 29 on Form 1040.

Taxpayers can claim the self-employed health insurance deduction if the insurance plan is established under their business and if any of the following are true:

• They were self-employed and had a net profit for the year,

• They used one of the optional methods to figure net earnings from self-employment on Schedule SE, or

• They received wages from an S corporation in which the taxpayer was a more-than-2-percent shareholder.

During tax year 2008, the most recent year for which data is available, the self-employed health insurance deduction was claimed on 3.6 million tax returns, reducing taxpayers’ adjusted gross incomes by $21 billion.

Small Business Health Care Tax Credit

In general, the Small Business Health Care Tax Credit is available to small employers that pay at least half of the premiums for single health insurance coverage for their employees. It is specifically targeted to help small businesses and tax-exempt organizations that primarily employ moderate- and lower-income workers.

Small businesses can claim the credit for 2010 through 2013 and for any two years after that. For tax years 2010 to 2013, the maximum credit is 35 percent of premiums paid by eligible small businesses and 25 percent of premiums paid by eligible tax-exempt organizations. Beginning in 2014, the maximum tax credit will increase to 50 percent of premiums paid by eligible small business employers and 35 percent of premiums paid by eligible tax-exempt organizations.

The maximum credit goes to smaller employers –– those with 10 or fewer full-time equivalent (FTE) employees –– paying annual average wages of $25,000 or less. The credit is completely phased out for employers that have 25 or more FTEs or that pay average wages of $50,000 or more per year. Because the eligibility rules are based in part on the number of FTEs, not the number of employees, employers that use part-time workers may qualify even if they employ more than 25 individuals.

Eligible small businesses will first use Form 8941 to figure the credit and then include the amount of the credit as part of the general business credit on its income tax return.

General Business Credit for Employers

The general business credits of eligible small businesses in 2010 are not subject to alternative minimum tax The new law allows general business credits to offset both regular income tax and alternative minimum tax of eligible small businesses as described in Section 2012 of the Small Business Jobs Act. The provision is effective for any general business credits determined in the first taxable year beginning after December 31, 2009, and to any carryback of such credits. For a list of the general business credits, see Form 3800.
Small Businesses Can Benefit from Higher Expensing / Depreciation Limits

For tax years beginning in 2010 and 2011, small businesses can expense up to $500,000 of the first $2 million of certain business property placed in service during the year.

In general, businesses can choose to treat the cost of certain property as an expense and deduct it in the year the property is placed in service instead of depreciating it over several years. This property is frequently referred to as section 179 property, after the relevant section in the Internal Revenue Code.

Section 179 property is property that you acquire by purchase for use in the active conduct of your trade or business, including:

• Tangible personal property.

• Other tangible property (except buildings and their structural components) used as:

1. An integral part of manufacturing, production, or extraction or of furnishing transportation, communications, electricity, gas, water, or sewage disposal services;

2. A research facility used in connection with any of the activities in (1) above; or

3. A facility used in connection with any of the activities in (1) above for the bulk storage of fungible commodities.

• Single purpose agricultural (livestock) or horticultural structures.

• Storage facilities (except buildings and their structural components) used in connection with distributing petroleum or any primary product of petroleum.

• Off-the-shelf computer software.
Section 179 property generally does not include land, investment property (section 212 property), property used mainly outside the United States, property used mainly to furnish lodging and air conditioning or heating units.

The Small Business Jobs Act (SBJA) of  2010 increases the section 179 limitations on expensing of depreciable business assets for tax years beginning in 2010 and 2011 and expands temporarily the definition of section 179 property, for tax years beginning in 2010 and 2011, to include certain qualified real property a taxpayer elects to treat as section 179 property. Qualified real property means qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property.  

The $500,000 amount provided under the new law is reduced, but not below zero, if the cost of all section 179 property placed in service by the taxpayer during the tax year exceeds $2 million.

For tax years beginning in 2012, the maximum amount is $125,000; before enactment of the 2010 tax relief legislation, it was set at $25,000.
Depreciation limits on business vehicles

The total depreciation deduction (including the section 179 expense deduction and the 50 or 100 percent bonus depreciation) you can take for a passenger automobile (that is not a truck or a van) you use in your business and first placed in service in 2010 is increased to $11,060. The maximum deduction you can take for a truck or van you use in your business and first placed in service in 2010 is increased to $11,160.  If you do not take any bonus depreciation for the passenger automobile, truck, or van you use in your business and first placed in service in 2010, the maximum deduction you can take for a passenger automobile is $3,060 and for a truck or van is $3,160.

50 or 100 Percent Bonus Depreciation

Generally, businesses can take a special depreciation allowance to recover part of the cost of qualified property placed in service during the tax year. The allowance applies only for the first year you place the property in service.

Businesses that acquire and place qualified property into service after Sept. 8, 2010 can now claim a depreciation allowance of 100 percent of the cost of the property. The property must be placed in service before Jan. 1, 2012 (Jan. 14, 2013 in the case of certain longer-lived and transportation property).   Businesses that acquire qualified property during 2010 on or before Sept. 8, 2010 can claim a depreciation allowance of 50 percent of the cost of the property.  The property must be placed in service before Jan. 1, 2013 (Jan. 1, 2014 in the case of certain longer production period property and for certain aircraft.)

The allowance is an additional deduction you can take after any section 179 deduction and before you figure regular depreciation under MACRS for the year you place the property in service. The types of property that can be depreciated are described in the instructions to Form 4562.  

Small Businesses To Use EFTPS for Deposits Beginning in 2011

The paper coupon system for Federal Tax Deposits will no longer be maintained by the Treasury Department after Dec. 31, 2010. Most businesses must now make deposits and pay federal taxes through the Electronic Federal Tax Payment System (EFTPS).

Using EFTPS to make federal tax deposits provides substantial benefits to both taxpayers and the government. EFTPS users can make tax payments 24 hours a day, seven days a week from home or the office.

Deposits can be made online with a computer or by telephone. EFTPS also significantly reduces payment-related errors that could result in a penalty. The system helps taxpayers schedule dates to make payments even when they are out of town or on vacation when a payment is due. EFTPS business users can schedule payments up to 120 days in advance of the desired payment date.

Information on EFTPS, including how to enroll, can be found on line or by calling EFTPS Customer Service at 1-800-555-4477.

Gustavo A Viera CPA

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Senate Passes 1099 Repeal Amendment

Posted on 04/02/201106/07/2020Categories TaxTags , , , , , , , , , , , , , , ,   Leave a comment on Senate Passes 1099 Repeal Amendment

Senate Passes 1099 Repeal Amendment

Miami CPA Gustavo Viera reports that the Senate approved an amendment Wednesday to repeal the expanded 1099 information reporting requirements in the health care reform law.

Two similar, but competing amendments were introduced this week by Democratic and Republican lawmakers to be attached to a larger re-authorization bill for the Federal Aviation Administration (see 1099 Repeal Amendments Proposed for Aviation Administration). One came from Sen. Debbie Stabenow, D-Mich., and the other from Sen. Mike Johanns, R-Neb., who had both introduced earlier attempts to repeal the 1099 reporting requirements.

The two amendments mainly differed in a few words regarding the handling of administrative expenses at the Social Security Administration. To avoid adding to the budget deficit, Stabenow’s amendment authorizes the director of the Office of Management and Budget to cut unnecessary unobligated spending, but exempts the Social Security Administration’s administrative expenses from being cut. There are also differences in the cost estimates of the two amendments and in how they would be offset.

The repeal of the 1099 reporting requirements enjoyed broad bipartisan support. The requirements, which were included in the Patient Protection and Affordable Care Act, would have required businesses to report to the Internal Revenue Service any purchases of goods and services over $600 a year from another business or individual.

Senate Finance Committee Chairman Max Baucus, D-Mont., who has tried several times to get the 1099 reporting requirements repealed, hailed the approval of the amendment containing language exempting the Social Security Administration’s expenses. The Senate voted 81-17 to reject a point of order that had been raised against the Stabenow amendment.

“We heard small businesses loud and clear, and today both parties came together in a bipartisan manner to respond to their concerns,” Baucus said in a statement.  “Eliminating these paperwork requirements lets small businesses focus on the critical work of growing their businesses and creating jobs. This amendment is paid for by cutting spending in other areas, but we took the extra steps to ensure that not a thin dime of Social Security money is used. The common-sense solution we passed today delivers the paperwork relief small businesses need while protecting and preserving the crucial Social Security and veterans benefits millions of people in Montana and across the country rely on.”

The larger, $34.5 billion FAA legislation enjoys wide bipartisan support and includes $8 billion for airport construction and infrastructure improvement. It also would establish a whistleblower office at the FAA, upgrade air control technologies, and create a national review board that would travel to FAA offices to perform safety audits.

There was no vote on the Johanns amendment on Wednesday. However, he hailed the passage of the repeal, pointing out that the Stabenow amendment was nearly identical to the language of the Small Business Paperwork Elimination Act that he had introduced, which had attracted 61 co-sponsors, including 16 Democrats.

“I’m thrilled that after multiple attempts to repeal this burdensome mandate, the Senate has finally done the right thing in voting to repeal it,” Johanns said in a statement. “The small business owners and organizations who stepped forward in opposition to this 1099 overreach were instrumental in sustaining the momentum that has resulted in wide bipartisan support. I look forward to continuing the effort to repeal the health care law and finding true solutions to our health care challenges. This is a big victory for our job creators.”

Stabenow also praised passage of the amendment. “Today we provided a common-sense solution for business owners so they can focus on creating jobs, not filling out paperwork for the IRS,” she said. “Since last year, I have worked with my colleagues on both sides of the aisle to address this problem. If left unchecked, 40 million small businesses would see their IRS 1099 paperwork increase 2000 percent.”

Gustavo A Viera CPA

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Miami Accountant Offers Tax Refunds on Prepaid Debit Cards

Posted on 04/02/201106/07/2020Categories TaxTags , , , , , , , , , ,   Leave a comment on Miami Accountant Offers Tax Refunds on Prepaid Debit Cards

Miami Accountant Offers Tax Refunds on Prepaid Debit Cards

Our Miami Accounting Firm will will offer the cards to taxpayers as a safe, convenient and low-cost way to receive their tax refunds electronically, especially if they lack a bank account. The new program aims to provide consumer protection features for Americans with limited or no access to traditional banking services.

A low-cost option for faster delivery of their federal tax refund. This innovative card can be used for everyday financial transactions, such as receiving wages by direct deposit, withdrawing cash, making purchases, paying bills and building savings safely and conveniently, giving users more control over their financial futures.

Also this week, the Treasury began a companion pilot to encourage tens of thousands of current and potential payroll card users to direct deposit their 2010 federal tax refund onto existing payroll cards. Nationwide, more than 1.7 million workers use payroll cards to receive and access their wages, often because they do not have bank accounts. Working with ADP, a provider of payroll services, the Treasury will highlight the safety, ease and convenience of direct deposit onto payroll cards through tax season communications, including materials distributed with pay statements. 

The letters mailed to taxpayers about MyAccountCard contain information about the card’s features, including free services and the fee structure for optional services.  Many of the features, including free point-of-sale transactions, free online bill pay, free ATM cash withdrawals at more than 15,000 ATM machines nationwide, and free cash back at participating retail stores, will help cardholders limit the costs of using the card.  The information also explains how to sign up, and how to use the card to receive a federal tax refund and conduct everyday financial transactions. 

The Visa-branded MyAccountCard will be issued by Bonneville Bank, acting as Treasury’s financial agent and pursuant to a license from Visa U.S.A. Inc., with additional services provided by Bonneville Bank through its program manager, Green Dot Corporation, a prepaid financial services company.  Bonneville Bank, Visa and Green Dot will offer MyAccountCard cardholders a wide variety of card features, reliable customer service support by telephone and Internet, and a large nationwide reload network.

The tax-time pilots build on the Obama administration’s efforts to increase electronic payments and to empower Americans to make informed financial decisions. Those who receive Social Security, Supplemental Security Income and other types of federal benefits already have the choice to get their payments through the Direct Express Debit MasterCard card, which was designed for federal benefit recipients and is recommended by the U.S. Department of the Treasury.  

Gustavo A Viera CPA

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Reporting Business Income and Expenses – Which Accounting Method is Right for You?

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Reporting Business Income and Expenses – Which Accounting Method is Right for You?

In two previous posts, I addressed some key tax consolidations that small business owners and employers need to be aware of as we head into tax season, including the specific tax requirements that impact employers this time of year as well as changes to tax law that can benefit all businesses during the 2010 tax filing season.

While these considerations are very important, especially if you are new to business ownership, it’s also important you establish and follow clear accounting methods and periods to ensure you are accurately reporting all income and expenses for the tax year that’s just passed.

Whether you follow a calendar year, a fiscal year or a short tax year, each tax payer is required by the IRS to use a consistent accounting method (i.e. how your company’s transactions are recorded in your financial records), but how do you determine what’s right for your small business?

Below are some tips for choosing an accounting method and tax year for your business.

Choosing an Accounting Method

The two most commonly used accounting methods are cash and accrual. They key difference relates to how you account for how money goes in and out of your business.

1. Cash Method – This is a popular choice for small businesses because of its simplicity. Using this method your gross income is not counted until payment is actually received. Likewise, expenses are not counted until they are paid. For example, if a painter completes a project in November 2010, but doesn’t get paid until January 2011, under the cash method you would report this income in January, whereas if you used the accrual method you would report it in November.

For expenses, the same model applies – you claim business expense deductions as a tax deduction for the year in which you paid for the supplies.

The cash method is ideally suited to sole proprietors, freelancers and smaller un-incorporated businesses that have less complex finances and don’t wish to hire or outsource their accounting processes to a specialist.

Advantages/Disadvantages: While the cash method gives a solid view of cash flow, the downside of is that it doesn’t give a true picture of profitability or trending. For instance, you may have had a really busy August, but because you didn’t get paid until September or October, those months are artificially skewed as peak months.

2. Accrual MethodWith this method, income transactions are reported in the year that services were performed or all products were delivered, regardless of when the income was received or you get paid. As a rule of thumb, the job completion date should be your guide for recording the income in your books. Expenses are counted as transactions when you receive the goods or services (when you became liable for the expense) – regardless of whether you paid for them in that tax year or not and can be deducted as business expenses on your 2010 tax return, even if you didn’t pay for them until January 2011.

Advantages/Disadvantages: The advantages and disadvantages of accrual accounting methods, basically flip are essentially the same as the cash method, but flipped. So, while the accrual method gives you a solid view of income and outgoings, it can make cash flow trickier to assess. Because although your books may show significant booked income, there’s a possibility you may not have received that cash in hand yet.

What the IRS Says about Accounting Methods

The IRS offers more information on business accounting methods online in Publication 538 Accounting Methods and Periods. But as a general rule it’s good to be aware of these basics when it comes to choosing your accounting method:

  • You must choose an accounting method when you file your first tax return. To change the method down the line requires approval from the IRS.
  • No single accounting method is required. You must use a system that clearly reflects your income and expenses, and back it up with good record-keeping.
  • Use the same accounting method from year to year.

Choosing a Tax Year

Your tax year determines what specific period of time you report your income and expenses – it’s also known as your fiscal or accounting year.

Again you have two choices:

1. Calendar YearRunning from January 1 to December 31, the calendar year is adopted by most small businesses as their tax year simply because it is easy and intuitive (corporations are the only business type who cannot use this method).

2. Fiscal Year – A fiscal year runs for 12 consecutive months ending on the last day of any month except December 31.

AS with accounting methods, consistency is required, you must use your chosen tax year method for your first business tax return and for all subsequent future returns. If you need to change your tax year, you will need to file Form 1128, Application to Adopt, Change, or Retain a Tax Year, searchable on www.irs.gov.

Gustavo A Viera CPA

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Ten Tax Benefits for Parents

Posted on 03/02/2011Categories TaxTags , , , , , , , , , , , , , ,   Leave a comment on Ten Tax Benefits for Parents

Ten Tax Benefits for Parents

Did you know that your children may help you qualify for some tax benefits? Here are 10 tax benefits the IRS wants parents to consider when filing their tax returns this year.

  1. Dependents In most cases, a child can be claimed as a dependent in the year they were born. For more information see IRS Publication 501, Exemptions, Standard Deduction, and Filing Information.
  2. Child Tax Credit You may be able to take this credit on your tax return for each of your children under age 17. If you do not benefit from the full amount of the Child Tax Credit, you may be eligible for the Additional Child Tax Credit. For more information see IRS Publication 972, Child Tax Credit.
  3. Child and Dependent Care Credit You may be able to claim the credit if you pay someone to care for your child under age 13 so that you can work or look for work. For more information see IRS Publication 503, Child and Dependent Care Expenses.
  4. Earned Income Tax Credit The EITC is a benefit for certain people who work and have earned income from wages, self-employment or farming. EITC reduces the amount of tax you owe and may also give you a refund. For more information see IRS Publication 596, Earned Income Credit.
  5. Adoption Credit You may be able to take a tax credit for qualifying expenses paid to adopt an eligible child.  Taxpayers claiming the adoption credit must file a paper tax return because adoption-related documentation must be included.  For more information see the instructions for IRS Form 8839, Qualified Adoption Expenses.
  6. Children with Earned Income If your child has income earned from working they may be required to file a tax return. For more information see IRS Publication 501.
  7. Children with Investment Income Under certain circumstances a child’s investment income may be taxed at the parent’s tax rate. For more information see IRS Publication 929, Tax Rules for Children and Dependents.
  8. Higher Education Credits Education tax credits can help offset the costs of education. The American Opportunity and the Lifetime Learning Credit are education credits that reduce your federal income tax dollar-for-dollar, unlike a deduction, which reduces your taxable income.  For more information see IRS Publication 970, Tax Benefits for Education.
  9. Student loan Interest You may be able to deduct interest you pay on a qualified student loan. The deduction is claimed as an adjustment to income so you do not need to itemize your deductions. For more information see IRS Publication 970.
  10. Self-employed health insurance deduction If you were self-employed and paid for health insurance, you may be able to deduct any premiums you paid for coverage after March 29, 2010, for any child of yours who was under age 27 at the end of 2010, even if the child was not your dependent. For more information see the IRS website.

More information can me found on our Miami CPA website www.vieracpa.com or by calling one of our CPA in Miami at 786-250-4450

Gustavo A Viera CPA

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Free Tax Filing

Posted on 03/02/2011Categories TaxTags , , , , , , , , , , , , , ,   Leave a comment on Free Tax Filing

Free Tax Filing

 Everyone can prepare and e-file their federal tax returns for free through the IRS Free File Program. Free File is offered through a public-private partnership between the Internal Revenue Service and brand-name tax software companies. Free File can help you do your taxes fast; it’s safe and it doesn’t cost anything.

Free File offers two options: easy-to-use software or online fillable forms.

Free File software is for taxpayers who earn $58,000 or less

Nearly 100 million Americans – that’s 70 percent of the nation’s taxpayers – can use the free brand-name software and secure e-filing offered by private-sector companies. Several software products also are in Spanish. Each company sets its eligibility requirements, generally based on income, age or state residency. However, if your adjusted gross income was $58,000 or less in 2010, you will find at least one tax software product to use.

Here’s how it works: You must access Free File through the IRS website. At http://www.irs.gov/freefile, you can use an online tool which allows you to give a little information about yourself and the tool will guide you to the software for which you are eligible. Or, you can review the complete list of companies and their offerings and make a selection.

Once you select a software product, you will be directed away from the IRS website to that company’s website. There, the software generally will offer a step-by-step guide through the tax preparation process.

Free File does all the hard work. You don’t need to be a tax expert; the software will help find tax breaks, such as the Earned Income Tax Credit, that you may be due. The software asks the questions; you supply the answers. It will find the right tax forms and do the math. Free File has a high satisfaction rate among its users, 98% recommend it to others. Combine e-file and direct deposit and you get your refund in as few as 10 days.

A word about security: all Free File companies use the latest is secure technology. The safety of taxpayer information is everyone’s priority. Thirty million taxpayers have used Free File since 2003, safely and securely.

Some companies provide state tax return software – sometimes for free and sometimes for a fee. Some states also have a relationship with the Free File Alliance and those states are listed on the companies’ websites.

Free File Fillable Forms Is Another Free Option

For people who make more than $58,000 or who are comfortable preparing their own tax return, there is Free File Fillable Forms. It also must be accessed through http://www.irs.gov/freefile. There is no software assistance with Free File Fillable Forms. It does basic math calculations. It does not support state income tax returns. It is perfect for the true do-it-yourself taxpayer who has preferred paper tax returns in the past. It also has free e-filing.

 And if you need help, please call one of our Miami CPA‘s.

Gustavo A Viera CPA

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6 Facts about Dependents and Exemptions

Posted on 02/02/2011Categories TaxTags , , , , , , , , , ,   Leave a comment on 6 Facts about Dependents and Exemptions

6 Facts about Dependents and Exemptions

Some tax rules affect every person who may have to file a federal income tax return – these rules include dependents and exemptions. Here are six important facts the IRS wants you to know about dependents and exemptions that will help you file your 2010 tax return.

  1. Exemptions reduce your taxable income. There are two types of exemptions: personal exemptions and exemptions for dependents. For each exemption you can deduct $3,650 on your 2010 tax return.
  2. Your spouse is never considered your dependent. On a joint return, you may claim one exemption for yourself and one for your spouse. If you’re filing a separate return, you may claim the exemption for your spouse only if they had no gross income, are not filing a joint return, and were not the dependent of another taxpayer.
  3. Exemptions for dependents. You generally can take an exemption for each of your dependents. A dependent is your qualifying child or qualifying relative. You must list the social security number of any dependent for whom you claim an exemption.
  4. If someone else claims you as a dependent, you may still be required to file your own tax return. Whether you must file a return depends on several factors including the amount of your unearned, earned or gross income, your marital status, any special taxes you owe and any advance Earned Income Tax Credit payments you received.
  5. If you are a dependent, you may not claim an exemption. If someone else – such as your parent – claims you as a dependent, you may not claim your personal exemption on your own tax return.

Some people cannot be claimed as your dependent. Generally, you may not claim a married person as a dependent if they file a joint return with their spouse. Also, to claim someone as a dependent, that person must be a U.S. citizen, U.S. resident alien, U.S. national or resident of Canada or Mexico for some part of the year. There is an exception to this rule for certain adopted children.

Gustavo A Viera CPA

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Two Tax Credits to Help Pay Higher Education Costs

Posted on 02/02/2011Categories TaxTags , , , , , , , , , ,   Leave a comment on Two Tax Credits to Help Pay Higher Education Costs

Two Tax Credits to Help Pay Higher Education Costs

There are two federal tax credits available to help you offset the costs of higher education for yourself or your dependents.  These are the American Opportunity Credit and the Lifetime Learning Credit.

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

For each student, you can choose to claim only one of the credits in a single tax year. 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 $2,000 more of her school costs.

However, if you pay college expenses for two or more students in the same year, you can choose to take credits on a per-student, per-year basis. You can claim the American Opportunity Credit for your sophomore daughter and the Lifetime Learning Credit for your senior son.

Here are some key facts the IRS wants you to know about these valuable education credits:

1. The American Opportunity Credit

  • The credit can be up to $2,500 per eligible student.
  • It is available for the first four years of post-secondary education.
  • Forty percent of the credit is refundable, which means that you may be able to receive up to $1,000, even if you owe no taxes.
  • The student must be pursuing an undergraduate degree or other recognized educational credential.
  • The student must be enrolled at least half time for at least one academic period.
  • Qualified expenses include tuition and fees, coursed related books supplies and equipment.
  • The full credit is generally available to eligible taxpayers who make less than $80,000 or $160,000 for married couples filing a joint return.

2. Lifetime Learning Credit

  • The credit can be up to $2,000 per eligible student.
  • It is available for all years of postsecondary education and for courses to acquire or improve job skills.
  • The maximum credited is limited to the amount of tax you must pay on your return.
  • The student does not need to be pursuing a degree or other recognized education credential.
  • Qualified expenses include tuition and fees, course related books, supplies and equipment.
  • The full credit is generally available to eligible taxpayers who make less than $60,000 or $120,000 for married couples filing a joint return.

You cannot claim the tuition and fees tax deduction in the same year that you claim the American Opportunity Tax Credit or the Lifetime Learning Credit. You must choose to either take the credit or the deduction and should consider which is more beneficial for you.

For more information about these credits see IRS Publication 970, Tax Benefits for Education available at http://www.irs.gov or by calling one of our Accountants at 786-250-4450

Gustavo A Viera CPA

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