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Have you Filed your Taxes Yet?

Posted on April 4, 2015 at 5:17 PM Comments comments (8)

 It's the month of April and We're counting down to the final days of Tax Time. Have you filed your Taxes yet? Do you know that you have a few days left, to file your Taxes?  Here are some quick ideas, to help you organize and get your documents ready for Tax Filing:

  • Organize All your Income Statements - Get all your W-2s, 1099s , 1098s and 1095- A's( I spoke about this document in my earlier blog). Make a Checklist to ensure that none of these document is missing.

  • Organize your Auto Log - You have to ensure that, you have all the necessary logs to support your Business miles, moving miles, medical miles and charitable miles driven by you in the Year 2014.Gather all the logs and ensure that they are all added up together and totaled.

  • Coordinate your Deductions - If you and someone else share a dependent, you will need to confirm, that you are both on the same page, as to who will claim the dependent. This is true for Single Tax Payers, Divorced Taxpayers, Taxpayers with elderly parents/Grandparents, and Parents with Older Children.

  • Review all other Financial Information - Review other parts of your financial life for possible organization and updates. This includes Insurance, Investments, Legal Documents, Safety Plans, Identity Theft Protection , Credit Scores, Retirement Planning, Retuirement Account Contributions and your Home's Annual Budget.

  • Collect all your Receipts and Sort them - You can make use of your previous year's Tax Return, and begin to gather and sort your necessary Tax Records. Sort your Tax Records to match the items on your Tax Return.

  • Review and Update your Withholdings - Make a Quick Review of your W-2 and decide if now is the time to have your Employer update your withholding amounts. A second check might be needed, after you file your Taxes.

       Here is a list of the common Tax Records, that we all need to have, for an effective Tax Filing:

             1. Informational Tax Forms( W-2, 1099, 1098, 1095-A, Plus Others) that disclose Wages, Interest Income, Dividends and Capital Gain/Loss Activity.

             2.  Other Forms, that disclose Possible Income ( Jury Duty, Unemployment, IRA    Distributions and Similar Items).

            3.   Business K-1 Forms


            4.  Bank and Investment Statements


            5.  Mortgage Interest Statements.


           6. Business Expenses.


           7. Property Tax Statements.


          8.  Mileage Logs for Business, Moving, Medical and Charitable Giving.


          9.  Medical, Dental and Vision Expenses.


         10. Tuition Paid Statements.


         11. Records of Any Asset Purchases and Sales.


         12.  Health Insurance Records( Including Medicare and Medicaid).


         13. Charitable Receipts and Documentation.


        14. Social Security Records.


        15. Credit Card Statements.


        16. Records of Any Out of State Purchases, that may require Sales Tax.


        17. Records of Any Estimated Tax Payments.


        18.  Contribution Records


        19. Educational Expenses( Including Student Loan Interest Expenses).


        20. Casualty and Theft Loss Documentation.


        21.  Moving Expenses.


       22.  Home Sales Records.

    If you are not sure whether any of your Documents are important for Tax Purposes, Retain the Documentation. It is better to save unnecessary documentation , than regret that you did not present the document to support your Tax Deductions.
 
   If you need assistance in organizing your Documents and getting them ready for Tax Purposes, as well as setting up your record keeping system, so that you don't miss any Tax Deductions, Feel Free to call us on 202.422.4586 to help you out.


   You will be glad you did.

  



       



     

              


10 Things You Need to Know about Your 2015 Tax Filing Season

Posted on January 26, 2015 at 12:03 PM Comments comments (37)

   We welcome you to the Year 2015.
   We are all aware that the IRS has opened up its system to start accepting our 2014 Tax Returns; we should have also started receiving our W-2s and other earned Income Statements. Even if you don't intend to file right away, you can start gathering your receipts, Bank Statements and other important documents.
     It is important to know that Tax Preparation Could be a little more complicated this Year, Thanks to the New Standard Deduction Amounts and the Affordable Care Act. We have compiled the following information, for you to take note, while filing your 2014 Tax Return:

 1) You need to decide which type of Deduction, you want to take: You have to compare and decide, whether you want to itemize your Deductions or take the Standard Deduction. Your itemized Deductions are the items, you paid for during the year 2014, and you may be able to deduct. Expenses could include Home Mortgage Interest, State Income Taxes or Sales Taxes (But not both), Real Estate and Personal Property Taxes and Gifts to Charities. They may also include Large Casualty or theft losses or Large Medical and Dental expenses, that insurance did not cover. Unreimbursed Employee Business Expense may also be deductible.
In most Cases, Your Federal Income Tax will be less, if you take the larger of your itemized Deduction or Standard Deduction.


 2) If you choose not to itemize, your Basic Standard Deduction amount depends on your Filing Status. For the 2014 Tax Returns, the Basic Amounts are:
  •   Single                        -  $6,200 ( Compared to $6,100 for Year 2013) 
  •   Married Filing Jointly - $12,400 ( Compared to $12,200 for the Year 2013)
  •   Head of Household   - $ 9,100 ( Compared to $ 8,950 for the Year 2013)
  •   Married Filing Separately - $ 6,200 ( Compared to $6,100 for the Year 2013)
  •   Married Filing Jointly and Surviving Spouses - $12,400 (Compared to $12,200 for the Year 2013).

 3) As a Business Owner, if you choose to itemize your Deductions, your Expenses must be Ordinary and Necessary. An Expense is 'ordinary', if it is customary and conventional for the tax Payer's line of Business. A Necessary Expense is helpful in the Tax Payer's Business, but it need not be indispensable.

 4) The Standard Mileage Rate for each Business Mile driven is 56cents for the Year 2014, and rises to 57.5 cents for the Year 2015. To Claim Deduction for the Business Use of your Car, it is better to use the Standard Mileage Rate, rather than the Actual Costs. 

 5) As a Business Owner, you need to take note of the following Expense Treatment during the Year, so that you can reduce your Tax Liability:
  • Business Equipment: Equipment is grouped as Capital Expenditures, and must be depreciated. This is why lumping Equipment with Supplies is not a Good Idea.
  • Meals & Lodging: When travelling for Business, Lodging is 100% deductible but the Away from Home Meal Deduction is limited to 50% of the cost. So if Meals are charged to a Hotel Room, they must be accounted for separately, and keeping a copy of the Hotel Statement shows the charges, as well as a credit card receipt or other payment receipt is advisable.
  • Entertainment at Sports Events & Theatres: When entertaining Customers at Sporting events and theatres, the deduction is limited to 50% of the face value of the Ticket. The Cost of Entertainment must be "directly related" or "associated with" Business or the Production of Income.
  • Home Office Deductions: There are 2 Methods of deducting the Business Use of a Home. One is the Conventional Method of prorating the expenses (With some limitations) of the Home by Multiplying the Allowable Expenses by the Business Use Square Footage Divided by the Total Square Footage of the Home. The Other Method, referred to as the Simplified Method allows $5/ Square Foot Deduction(Maximum 300 Square Feet) without having to keep records of expenses. Both Methods have the same eligibility requirements.
  
 6)  This will be the first Filing Season with Two Major Provisions from the Affordable Care Act on Form 1040.They are the Premium Tax Credit and the Individual Shared Responsibility Payment on Form 1040.

 7) The Premium Tax Credit is a refundable Tax Credit, which is also advanceable, designed to help Eligible Individuals and Families with low or Moderate Income, so that they can afford and purchase Health Insurance through the Health Insurance Marketplace. You can claim the Credit, when you file your Taxes, and this will lower your Tax Liability or you can choose to increase your Returns.

 8) The Individual Shared Responsibility Payment on Form 1040 is the Fine payment that you make with your 2014 Tax Returns, for not having Health Insurance Coverage. It is the greater of :
  •    1% of Your Household Income that is above the Tax Return Threshold for your Filing Status, Such as Married Filing Jointly or Single.
                                                  Or
  •  Your Family's Flat Dollar Amount, Which is $95 Per Adult and $47.50 Per Child, limited to a Maximum of $285 for the Year 2014; $325 for the Year 2015 and $695 for the Year 2016 and the Applicable Dollar Amount will be inflation adjusted for the Tax Years after 2016.

  9)   Tax Payers will need a Form from the Market Place, called Form 1095- A, to complete their Tax Return. The Forms should arrive by Mail by the End of January or First Week in February and can also be downloaded from the MarketPlace Account. You are advised to wait for the Form 1095-A to arrive, before you file your Taxes.          

10) Small Employer Health Insurance Credits: An Eligible Small Business Employer may claim Tax Credit, if it makes nonelective contributions that pay at least one-half of the cost of Health Insurance Premiums for the coverage of its participating Employees.  An Employer Contribution is considered a nonelective contribution, as long as it is not made through a Salary reduction arrangement, and is done on behalf of each employee, who enrolls in a Qualified Health Plan, offered by the Employer.This Credit is computed on Form 8941 and is claimed as a component of the General Business Credit.

 We have complied these Basic Information, to enlighten you about the latest Tax Changes, and prepare you to get ready for the 2015 Tax Filing Season. Remember, if you are fully prepared, it will save you time and help ensure that you receive all the Tax Benefits, Credits and Deductions Allowed.

  We know that Every Business is unique and the Basis of ensuring a correct Tax Liability is having a Good Record Keeping System. If you will need assistance in setting up your Record Keeping System to reflect your correct Tax Deduction. Please feel free to call us to help you out.
You will be glad you did.