EDUCATION CREDITS

Yesterday I talked about all the tax advantages available to taxpayers with children. I will touch on the education credit today. A 20% credit (maximum $2,500 per student) is available for expenses you pay for you or one of your dependents who attend a higher education (college) institution. The credit covers costs such as tuition, books, and computers if required by the college. It also includes any fees which the school requires the student to pay to maintain his/her enrollment. As always, there are limitations and exceptions so give me a call and we can discuss your unique circumstances but this is yet another huge tax break available to taxpayers to reduce your tax liability.

HEAD OF HOUSEHOLD

The filing status “Head of Household” is not a commonly used filing status but if you qualify, you are eligible for lower tax rates and other tax advantages. To qualify as a “Head of Household” the taxpayer must be unmarried and have paid more than half the cost of maintaining a home for yourself and a qualifying person. Generally, the qualifying person is a child, but also can be another family member. The rules are involved but if you qualify it can be very advantageous for the taxpayer. Give me a call and we can discuss your specific situation.

[b]Mark Miller, CPA
303-704-1605
marksjets@gmail.com

IRS SENDING YOU LETTERS?

Is the IRS sending you letters or trying to collect your back taxes. I can help. I can't eliminate your debt (and nobody can despite what you hear on the radio and TV), but I can get them off your back and work out a payment arrangement for you with them. They are really not the monsters they are perceived to be and are willing to work with delinquent taxpayers so long as you make an honest attempt to work towards paying off your debt. In addition, I can review your circumstance and make sure you owe the smallest amount possible. Give me a call so we can discuss your specific needs.

Mark Miller, CPA
303-704-1605
marksjets@gmail.com

Safeguard Your Refund – Choose Direct Deposit

Direct deposit is the fast, easy and safe way to receive your tax refund. Whether you file electronically or on paper, direct deposit gives you access to your refund faster than a paper check.
Here are four reasons more than 80 million taxpayers chose direct deposit in 2012:
1. Security. Every year the U.S. Postal Service returns thousands of paper checks to the IRS as undeliverable. Direct deposit eliminates the possibility of a lost, stolen or undeliverable refund check.
2. Convenience. With direct deposit, the money goes directly into your bank account. You will not have to make a special trip to the bank to deposit the money yourself.
3. Ease. It’s easy to choose direct deposit. When you are preparing your tax return, simply follow the instructions on the tax return or in the tax software. Make sure you enter the correct bank account and bank routing transit numbers.
4. Options. You can deposit your refund into more than one account. With the split refund option, taxpayers can divide their refunds among as many as three checking or savings accounts and up to three different U.S. financial institutions. Use IRS Form 8888, Allocation of Refund (Including Savings Bond Purchases), to divide your refund. If you are designating part of your refund to pay your tax preparer, you should not use Form 8888. You should only deposit your refund directly into accounts that are in your own name, your spouse’s name or both if it’s a joint account.
There is no additional charge to E-File or Direct deposit your refund when I do your taxes so give me a call and I can give you a quote as to what my preparation fee would be.

Mark Miller, CPA
303-704-1605
marksjets@gmail.com

DID YOU NOTICE THAT YOUR PAYCHECK HAS GOTTEN SMALLER

For the past two years the government has given us a break on the Social Security (FICA) tax that is automatically withheld from our paychecks. For several years the rate was 7.65% and these last two years it was lowered (to theoretically stimulate the economy) to 5.65%. Well, as part of the package to avoid falling off the “Fiscal Cliff”, our leaders in Washington went back to the 7.65% Social Security tax and as a result our paychecks are all a little smaller this year. This also applies to Self Employed taxpayers who pay the same tax via Self Employment Tax which is now 15.3% as opposed to the 13.3% the last two years.

Need a quote on your taxes? Give me a call.
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Mark Miller, CPA
303-704-1605
marksjets@gmail.com

The IRS receives thousands of reports every year from taxpayers who receive emails out-of-the-blue claiming to be from the IRS. Scammers use the IRS name or logo to make the message appear authentic so you will respond to it. In reality, it’s a scam known as “phishing,” attempting to trick you into revealing your personal and financial information. The criminals then use this information to commit identity theft or steal your money.

The IRS has this advice for anyone who receives an email claiming to be from the IRS or directing you to an IRS site:

Do not reply to the message;
Do not open any attachments. Attachments may contain malicious code that will infect your computer; and
Do not click on any links in a suspicious email or phishing website and do not enter confidential information. Visit the IRS website and click on 'Identity Theft' at the bottom of the page for more information.
Here are five other key points the IRS wants you to know about phishing scams.

1. The IRS does not initiate contact with taxpayers by email or social media channels to request personal or financial information;

2. The IRS never asks for detailed personal and financial information like PIN numbers, passwords or similar secret access information for credit card, bank or other financial accounts;

3. The address of the official IRS website is http://www.irs.gov. Do not be misled by sites claiming to be the IRS but ending in .com, .net, .org or anything other than .gov. If you discover a website that claims to be the IRS but you suspect it is bogus, do not provide any personal information on their site and report it to the IRS;

4. If you receive a phone call, fax or letter in the mail from an individual claiming to be from the IRS but you suspect they are not an IRS employee, contact the IRS at 1-800-829-1040 to determine if the IRS has a legitimate need to contact you. Report any bogus correspondence. Forward a suspicious email to phishing@irs.gov;

5. You can help the IRS and other law enforcement agencies shut down these schemes. Visit the IRS.gov website to get details on how to report scams and helpful resources if you are the victim of a scam. Click on "Reporting Phishing" at the bottom of the page.

If you have a child under age 17, the Child Tax Credit may save you money at tax-time. Here are some facts the IRS wants you to know about the credit.
• Amount. The non-refundable Child Tax Credit may help reduce your federal income tax by up to $1,000 for each qualifying child you claim on your return.
• Qualifications. For this credit, a qualifying child must pass seven tests:
1. Age test. The child must have been under age 17 at the end of 2012.
2. Relationship test. The child must be your son, daughter, stepchild, foster child, brother, sister, stepbrother, or stepsister. A child may also be a descendant of any of these individuals, including your grandchild, niece or nephew. You would always treat an adopted child as your own child. An adopted child includes a child lawfully placed with you for legal adoption.
3. Support test. The child must not have provided more than half of their own support for the year.
4. Dependent test. You must claim the child as a dependent on your federal tax return.
5. Joint return test. The child cannot file a joint return for the year, unless the only reason they are filing is to claim a 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 2012.
• Limitations. The Child Tax Credit is subject to income limitations, and may be reduced or eliminated depending on your filing status and income.
• Additional Child Tax Credit. If you qualify and get less than the full Child Tax Credit, you could receive a refund even if you owe no tax with the refundable Additional Child Tax Credit.
• Schedule 8812. If you qualify to claim the Child Tax Credit make sure to check whether you must complete and attach the new Schedule 8812, Child Tax Credit, with your return. If you qualify to claim the Additional Child Tax Credit, you must complete and attach Schedule 8812.
As you can see there are a few hoops to jump through but the effort is worth it as the credit for $1,000 per child is significant. Remember, a $1,000 credit increases your refund by $1,000 or reduces the amount you owe by $1,000. Don’t miss out. If you have questions or need help, give me a call and we can discuss your individual situation.

Mark Miller, CPA
303-704-1605
marksjets@gmail.com

If your business is a Corporation or a Sub S Corporation, or, your LLC is taxed as an S Corp, then the due date for your business return is March 15, 2013. Don’t get caught paying an unnecessary penalty. I can still get our return done by the due date, and if you don’t have your stuff ready I can file an extension on your behalf. Give me a call and we can discuss your specific individual situation.

Mark Miller, CPA
303-704-1605
marksjets@gmail.com

If you have an error on a prior year return, it may be cost effective to amend that return and get some additional money back from the IRS. There are many credits and deductions that are often overlooked which can result in an additional refund. The one limitation you should be aware of is you have 3 years from the due date to claim a refund so, for example, if you want to amend your 2009 tax return to claim an additional refund, you must have the amendment postmarked by April 15, 2013.

Give me a call if you want me to look at your old tax returns. There is no charge for the initial consultation and then we can determine if it is cost effective to do the work. I can also give you a quote on the current year tax return as well.

Mark Miller, CPA
303-704-1605
marksjets@gmail.com

Seven Important Tax Facts about Medical and Dental Expenses

If you paid for medical or dental expenses in 2012, you may be able to get a tax deduction for costs not covered by insurance. The IRS wants you to know these seven facts about claiming the medical and dental expense deduction.
1. You must itemize. You can only claim medical and dental expenses for costs not covered by insurance if you itemize deductions on your tax return. You cannot claim medical and dental expenses if you take the standard deduction.
2. Deduction is limited. You can deduct medical and dental expenses that are more than 7.5 percent of your adjusted gross income.
3. Expenses paid in 2012. You can include medical and dental costs that you paid in 2012, even if you received the services in a previous year. Keep good records to show the amount that you paid.
4. Qualifying expenses. You may include most medical or dental costs that you paid for yourself, your spouse and your dependents. Some exceptions and special rules apply. Visit IRS.gov for more details.
5. Costs to include. You can normally claim the costs of diagnosing, treating, easing or preventing disease. The costs of prescription drugs and insulin qualify. The cost of medical, dental and some long-term care insurance also qualify.
6. Travel is included. You may be able to claim the cost of travel to obtain medical care. That includes the cost of public transportation or an ambulance as well as tolls and parking fees. If you use your car for medical travel, you can deduct the actual costs, including gas and oil. Instead of deducting the actual costs, you can deduct the standard mileage rate for medical travel, which is 23 cents per mile for 2012.
7. No double benefit. Funds from Health Savings Accounts or Flexible Spending Arrangements used to pay for medical or dental costs are usually tax-free. Therefore, you cannot deduct expenses paid with funds from those plans.

Recording medical expenses on your tax return can be tricky, especially if you have an HAS. Don’t miss out on valuable deductions. Consult your CPA or give me a call and I can help you through your individual situation.

Mark Miller, CPA
303-704-1605
marksjets@gmail.com

Don't let deductions and credits pass you buy. In most cases having a Tax Professional prepare your taxes will save you more in taxes then the cost of the Tax Return. Give me a call and I can quote you a price that fits your specific needs.

Mark Miller, CPA
303-704-1605
marksjets@gmail.com

If you have a regular Corporation or a Sub Chapter S Corporation tax return for 2012 it is due on Friday (March 15, 2013). The penalty for late filing is pretty high and not worth forgoing a few minutes of paperwork to avoid the penalty. Even if you don't have the money to pay the taxes due, you should file an extension as the late filing penalty is much greater than the late payment penalty.

In the case of the S-Corporation, the late filing penalty is $195 per shareholder, per month. No late payment penalty as taxes are generally not paid with the tax return.

In the case of the regular (C) Corporation, the penalty is 5% of the tax due per month (max 25%) for late filing but only .5% of tax due per month for late payments. (max 25%).

Don't get caught paying this unnecessary penalty. Give me a call and lets get your extension filed and avoid this expense.

Mark Miller, CPA
303-704-1605
marksjets@gmail.com