Ask the Accountant
Author by Umang Thakkar
Taxes for 2015 are due on or before April 18, 2016 (due to Emancipation day holiday in Washington D.C. being observed on April 15. While you have more than 60 days for tax filing due date, you should prepare yourself now. By being prepared you will be able to file your taxes early and with ease. Let’s look at ways to be properly organized.
- Download a Tax Organizer. You can get one from us by emailing me at email@example.com.
- Decide if you are going to work with a Tax Expert or are you going to prepare your own taxes. If working with a Tax Expert than have a preliminary call with the Tax Professional and sync up to get a better understanding on the process, timelines, fees, etc.
- Get all your Income / Earnings statements such as W-2, 1099 (-Int, – Div, -B, -Misc, – G, – R, etc.), K-1s, Social Security Benefits, Rental Income and any other income.
- Gather all your Deductions such as Mortgage Interest, Charitable Contributions, Medical Expenses, Education Expenses, Student Loan Interest, Retirement Contributions, Business Expenses, Job Related Expenses, Rental Expenses, HSA Contributions, Child Care Expenses, etc.
- Get amounts of all taxes paid such as State and Local Income Taxes, Real Estate Taxes, Ad-Voleram and Personal Property Taxes, Estimated Tax Payments.
- Get all details on Foreign Income, Foreign Bank Accounts (Location, Name of Bank, Account Number, Highest value of account during the year) and Foreign Assets.
- Direct Deposit / Withdrawal Information – Name of Bank / Routing / Account Number.
- Make Copies of all your records before you turn them to your tax preparer.
Do not wait until the last day! Get yourself enough time to have your taxes prepared and reviewed.
Yes. Business Assets such as computers are allowed to be written off (or ‘depreciate’) part of the cost of those assets over a period of time. Computers are depreciated over 5 years under the most common depreciation method MACRS (Modified Adjusted Costs Recovery System).
This year you can also avail of 50% Bonus Depreciation on Qualified Property, alternatively the asset can also be completely written off in Year 1 (Under Section 179 Deduction).
You may be. There are two education tax credits–the American Opportunity credit (Hope credit) and the Lifetime Learning credit. To claim either credit in a given year (you cannot claim both in the same year), you must list your child as a dependent on your tax return. In addition, you must meet income limits.
Now, what credit might you be eligible for?
The American Opportunity Tax Credit (AOTC) is available to taxpayers for the first four years of college. Taxpayers eligible to claim the credit can benefit from: up to a $2,500 education credit per eligible student. 40% of the credit is refundable, which means you may receive up to a $1,000 refund even if you don’t owe any taxes
With the Lifetime Learning Credit there is no limit on the number of years that can be claimed for each student so it is also available to graduate students. Some of the benefits of the credit include a credit of 20% of up to $10,000 of qualified tuition and fees, up to a maximum of $2000. It is also available if student is part-time and even if not pursuing a degree.
Although Medical Expenses are deductible under Schedule A (if you are itemizing your deductions and not claiming Standard Deduction), very few taxpayers can take advantage of this deduction. You can deduct Medical Expenses only to the extent that unreimbursed expenses exceeds 10% of Adjusted Gross Income, commonly referred as AGI (7.5% of AGI if you are over age 65).
For example, if you are 45 years old and your AGI is $75,000 the first $7,500 ($75,000 x 0.10) effectively does not count. Before you go through all your Medical Expense bills, do a quick calculation based on your income to make sure your time will be well spent.
Deductible Medical Expenses include Doctor and Dentist Fees, Lab Fees, Contact Lenses, Glasses, Prescription Drugs, Medical Supplies, Medical Mileage (all that is not reimbursed or paid by your Insurance).
Umang Thakkar is the founder and owner of IncorpTaxAct. An Enrolled Agent with over 15 years, his expertise includes Taxation, Accounting & Payroll. Contact Umang Thakkar for more information. Visit www.incorptaxact.com, call (770) 682-3119, or email firstname.lastname@example.org with your questions and comments.