Here are a few headlines from that issue.
Congress has passed tax reform that will take effect in 2018, ushering in some of the most significant tax changes in three decades. There are a lot of changes in the new bill, which was signed into law on Dec. 22, 2017. Continue reading
Although you can’t deduct the value of time and energy spent on charitable endeavors, you can often write off un-reimbursed expenses incurred while performing charitable duties. Here are some of the more commonly overlooked charitable deductions.
This area of the tax code requires excellent recordkeeping. The IRS is quick to question large dollar amounts associated with charitable work, so keep your receipts and document your activities. Call us if have questions.
After you’ve graduated from college and taken up your first job only recently, income tax can give you a tough time. Young professionals find it troublesome to get the hang of income tax and the finances that come along.
Sometimes you can get this information from websites or social media profiles of renowned business consultants in Dubai, UAE and USA, however mostly you’re left to figure out your own way through income taxes.
It is for young professionals like you that we have created this comprehensive guide to income tax basics and explained everything… in Plain English. Read on.
What do the terms ‘Tax Year’ mean?
Tax Year is also known as Previous Year or Financial Year. It refers to the 12-month period that starts on April 1st and ends on March 31st of the next year. Tax Year starts and ends on these exact dates irrespective of when you start your job. Tax Year is the duration for which income taxes are withheld for earnings or the year for which income tax return is being filed.
What is the amount of income on which tax is paid?
Income tax has to be paid on all of your sources of income. Your total income is the sum total of all the following major income sources:
The amount of tax to be paid also depends on your age and gender as there are different income slabs for men, women, and senior citizens.
What are the documents required for filing income tax?
Filing income tax can be a daunting tax for first-timers. We recommend taking the help of an experienced chartered accountant. However, you will need to provide/submit the following documents:
Income taxes may seem daunting but they are an essential duty of all earning citizens also obliged upon them by the law. The collected amount helps in further development of the nation, and in an indirect way, is invested back on the citizens themselves.
Author Bio: Brenda Cagara
Brenda has been writing for websites, articles and blogs for five years now. She has written for a variety of niches but her main focus is business, tax, and finance. Currently, She is working with Riz & Mona Consultancy which offers company formation and branch office Dubai services. Other services are products registration, visa processing, bank account opening, trade license, trade mark, local sponsors and many more.
While everyone’s needs are different, here are some optional uses of your refund that may work for you.
Contribute your refund to your employer’s 401(k) plan. If your employer offers a matching contribution, that’s an immediate return on your money in addition to deferring taxes on your contribution. And, funds in the plan grow free of tax until withdrawal.
Use your refund to pay down credit card balances – you could earn a double-digit return.
Consider investing your refund in your child’s education. Both Section 529 college savings plans and education savings accounts offer tax-advantaged ways to save for college costs.
Take full advantage of your IRA options for retirement savings. Both Traditional and Roth IRAs are great ways to save for retirement.
If you’ve maximized your retirement and education savings, and your credit cards are under control, put your refund in diversified investments that make sense for your age and financial situation.
Ask yourself if getting a big refund every year is a smart idea. Would you rather invest your money during the year instead of making an interest-free loan to the government? If so, consider filing an updated Form W-4 with your employer.
Can you deduct interest expenses on your 2016 tax return? It depends. Generally, the tax law requires you to allocate interest payments under a complex set of rules. The tax results vary, based on whether the expense is characterized as mortgage interest, investment interest, business interest, or personal interest.
This is a basic overview on tax treatment of various forms of interest expense. It does not account for variations or special rules such as limits on passive activity interest. When in doubt, seek advice for your personal situation.
In most instances, a child can be claimed as a dependent in the year they were born. Be sure as a parent to state if your family size has increased this year. If so, you may be able to claim the child as a dependent.
You could 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 could be eligible for the Additional Child Tax Credit. The Additional Child Tax Credit is a refundable credit and could provide you with a refund even if you don’t owe tax.
You may be able to claim this credit if you pay someone to care for your child under age 13 while you’re busy at work. Be sure to note your child care expenses so we can claim this credit.
The EITC is a benefit for those 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.
You could also take a tax credit for qualifying expenses paid to adopt a child.
This is a savings account used to pay qualified expenses at an eligible educational institution. Contributions are not deductible, but qualified distributions are usually tax-free.
Education tax credits can help with the cost of education. The American Opportunity and the Lifetime Learning Credit are education credits that reduce your federal income tax.
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.
As CPAs and tax professionals, we know you can get all the help you need when managing your expenses and deductibles. As part of our service to tax-payers, we want to provide two helpful 2016 tax filing resources.
The first item is a Charitable Donation Value Guide. This guide is a list of the average prices of items held at the Salvation Army thrift stores, if the items are in good condition. New or expensive items would be higher and damaged materials less. Please use the list for your guidance only. Items can vary greatly in value depending on conditions such as condition, age, antique value, cleanliness, repair needed and value when new.
Our second resource to help you in the coming months with your 2016 tax filing is the Blank Tax Organizer. Thankfully, this organizer will help you put all those bank statements and receipts into one tidy place so your filing will be much easier.
Of course, both these resources are no substitute for the expertise of a professional CPA. If you’re looking for more helpful advice to make this tax season less stressful, please call Harvey and Caldwell today in Overland Park, KS to schedule an appointment and have a chat.
The IRS has announced the introduction of a new online tool to help taxpayers. This new IRS.gov feature allows taxpayers to view their tax account balance online. The balance includes any amount owed for tax in addition to penalties and interest for each tax year. Once you look at your balance, you can take advantage of online payment options. These include direct pay, pay by debit or credit card and Online Payment Agreement.
But you don’t have to rush. The service won’t disappear overnight. The tool is available Monday through Friday, 6 a.m. to 12:30 a.m. ET; Saturday, 6 a.m. to 10 p.m. ET; and Sunday, 6 p.m. to midnight ET. The balance will update no more than once every 24 hours, usually overnight.
For taxpayers who are brand new to the system, you will need the following to get started with Secure Access:
As part of the security process to authenticate taxpayers, the IRS will send verification, activation or security codes via both email and text. Remember that the IRS will not (and very rarely does) initiate contact via text or email asking for log-in information or personal data. You won’t be asked to click through links or input additional information with authentication contacts. Those IRS texts and emails will only contain one-time codes.
Are you ready for the gift-giving season? The time may already have arrived, at least from a tax perspective. Between now and December 31, you can take advantage of this year’s gift tax rules as part of your year-end planning.
Here are two ways to transfer assets.
The annual exclusion. The annual exclusion is the amount you can give to anyone, free of gift tax, each year. For 2016, the annual exclusion is $14,000. You and your spouse can combine your individual annual exclusions and make gifts of up to $28,000 to a single recipient.
Some gifts have special rules. For instance, education and medical expenses that you pay directly to the respective providers do not reduce your annual exclusion.
As the name suggests, the annual exclusion is a use-or-lose tax break that expires on December 31 of each year. For 2017, the annual exclusion remains $14,000.
The lifetime exemption. The lifetime exemption is the total amount you can give away during your lifetime without paying gift tax. For 2016, the lifetime exemption is $5,450,000. When you’re married, you can double the exemption, to a maximum of $10,900,000. Note that the lifetime exemption is “unified” with the estate tax exemption. That means the amount you use for gifting will reduce your estate tax exemption.
Gift-giving is a valuable estate planning tool. Please call to schedule an appointment for discussing these or other types of giving, including charitable gifts and gifts made in