In This Issue:
Let Us Help You Leverage What You Can Learn from Your Tax Return[dropcap]W[/dropcap]hat does your tax return say about your financial situation? The fact is, the paperwork you file each year offers excellent information about how you are managing your money—and about areas where it might be wise to make changes in your financial habits. If you have questions about your financial situation, remember that we can help. Our firm is made up of highly qualified and educated professionals who serve as trusted business advisors and how work with clients like you all year long.
So whether you are concerned about budgeting; saving for college, retirement or another goal; understanding your investments; cutting your tax bite; starting a business; or managing your debt, you can turn to us for objective answers to all your tax and financial questions.
We Can Help You Address the Issues that Keep You Up at Night
Where will your business be in five years? Would strategic budget cuts in some areas improve your company’s health? Are there ways you can boost revenue? If you are nearing retirement, is there a buyer or successor in the wings? These are the kinds of questions that keep many business owners up at night. Fortunately, we can probably help you sleep a little easier.
We can review your financial situation and develop creative strategies to minimize your tax liability and help you meet your financial goals. Contact one of our professionals today.
Education Tax Credits: Two Benefits to Help You Pay for College[dropcap]I[/dropcap]f you paid for college, it can mean tax savings on your federal tax return. There are two education credits that can help you with the cost of higher education. The credits may reduce the amount of tax you owe on your tax return. Here are some important facts you should know about education tax credits.
The first education credit that can help you with the cost of higher education is the American Opportunity Tax Credit. Under this tax credit you may be able to claim up to $2,500 per eligible student. Some tips to consider under this tax credit:
• It applies to the first four years at an eligible college or vocational school.
• It reduces the amount of tax you owe. If the credit reduces your tax to less than zero, you may receive up to $1,000 as a refund.
• It is available for students earning a degree or other recognized credential.
• It applies to students going to school at least half-time for at least one academic period that started during the tax year
• It includes the cost of tuition, books, required fees and supplies.
The second education credit that can help you with the cost of higher education is the Lifetime Learning Credit. Under this tax credit you are limited to $2,000 per tax return per year. Some tips to consider under this tax credit:
• It applies to all years of higher education. This includes classes for learning or improving job skills.
• It is limited to the amount of your taxes.
• It includes the cost of tuition, required fees, books, supplies and equipment that you must buy from the school.
Both the American Opportunity Tax Credit and the Lifetime Learning Credit have similarities:
• The credits apply to an eligible student. An eligible student can be yourself, your spouse or a dependent that you list on your tax return.
• You must file Form 1040A or Form 1040 and complete Form 8863, Education Credits, to claim these credits on your tax return.
• Your school should give you a Form 1098-T, Tuition Statement, showing expenses for the year. This form contains helpful information needed to complete Form 8863. The amounts shown in Boxes 1 and 2 of the form may be different from what you actually paid. For example, the form may not include the cost of books that qualify for the credit.
• You can’t claim either credit if someone else claims you as a dependent.
• You can’t claim both credits for the same student or for the same expense, in the same year.
• The credits are subject to income limits that could reduce the amount you can claim on your return.
To see if you are eligible to claim these credits visit the IRS webpage and use the Interactive Tax Assistant tool. If you can’t claim a tax credit, ask one of our professionals about other tax benefits you might be able to claim.
IRS Offers Many Outlets for Sharing Updates[dropcap]T[/dropcap] ax issues affect a wide range of people who process information in many different ways. To appeal to a wide range of people, the IRS offers updates in a variety of platforms. All you need is an internet connection and a device. The IRS uses the following platforms to share updates on tax changes, initiatives, products and services.
If you have a smartphone you can download the IRS2Go app for free by visiting the app store associated with your device. If you have an Apple device you can obtain the app from the iTunes app store. For Android devices, visit the Google Play store to download the IRS2Go app.
The app is available in both English and Spanish and can be used to check the status of your refund or provide tax preparation assistance. Download IRS2Go on your smartphone and connect with the IRS whenever you wish, wherever you are.
The IRS has an official YouTube channel which features IRS-produced videos on various tax administration topics. Here, you can watch short, informative videos in English, Spanish and even sign language. Currently the “irsvideos” channel has over twelve thousand subscribers and more than two million views on its videos since its launch in 2009.
The IRS YouTube channel was created to offer taxpayers a unique way to learn more about their rights, benefits and responsibilities under the tax code.
The IRS is using Twitter to share information with taxpayers and the tax professional community. You can follow @IRSnews on Twitter to receive these tax-related announcements. These tweets offer concise updates on complex issues. Currently, the account has over sixty thousand followers since its launch in 2009. They also tweet tax updates in Spanish at @IRSenEspanol.
A member since 2013, the IRS uses its Tumblr account to give taxpayers yet another way of accessing helpful tax tips through videos, podcasts, graphics and more. The IRS joined Tumblr to provide a new avenue for taxpayers to receive and share important updates.
Who knew anyone would “like” the IRS. If you have a Facebook account you can “like” the official IRS page to receive updates in your newsfeed. Currently, the page has over thirty-five thousand “likes” in a nation of over three million people.
Get the information you need even when you are on the go. Taxpayers can download IRS audio files to play on their portable music players. The audio files can be downloaded right off the IRS website; they are available in English and Spanish.
When using these platforms, it is important to remember not to share any confidential information such as your Social Security number. The IRS will not answer personal tax questions on their social media channels. If you have a personal question you can contact one of our professionals today.
Four Key Facts About Unemployment Benefits[dropcap]L[/dropcap]osing your job can be hard on your wallet and lead to tough economic times. Applying for unemployment benefits can provide relief to your hardship. If you lose your job and qualify for unemployment benefits there are several things you need to know about unemployment compensation and taxes.
First, unemployment compensation is taxable and must be included as income for the year. You should receive a Form 1099-G, Certain Government Payments by Jan. 31 of the following year. This form will show the amount paid to you and the amount of any federal income tax withheld.
Second, unemployment compensation is paid under U.S. or state law. There are various types of unemployment compensation. Unemployment includes amounts paid under U.S. or state unemployment compensation laws. More information can be found in Publication 525, Taxable and Nontaxable Income.
Third, union benefits may be taxable. You must include in your income any benefits paid to you from regular union dues. Other rules may apply if you contributed to a special union fund and those contributions are not deductible. In that case, you include as income any amount you received that was more than the contributions you made.
Fourth, you can choose to have federal income tax withheld from your unemployment. You can have this done using Form W-4V, Voluntary Withholding Request. If you choose not to have tax withheld, you may need to make estimated tax payments during the year.
If you’re facing financial difficulties from your decreased income you may be eligible for certain tax credits, such as the Earned Income Tax Credit. If you owe federal taxes and can’t pay your bill, contact the IRS. They may be able to ease your financial burden.
The professionals in our office can provide more information regarding unemployment benefits. Contact us today.