At tax time, you may find yourself considering the affect your IRA contributions may have on your taxes. If you’re planning to fund your retirement through the savings you’ve contributed to an IRA, you should be aware of what will be expected each tax season.

Traditional IRAs require the contributor to be under the age of 70 ½ by the last day of the year (December 31st), where Roth IRAs are not subject to a contribution age restriction. You are required to have taxable income if you want to save for retirement using an IRA. Wages, salaries, net self-employment profits, tips, commissions, bonuses, and any money received in alimony are all considered as taxable income. (more…)

Categories: Deductions, General Tags: , , ,

If you work from home there are some new options for claiming home office deductions making the process simpler and saving you time. Starting this tax year the IRS has simplified the process of claiming deductions when you use your home as a business, not only does it make it easier but it will help you maintain the necessary records needed. There has been no change in the current eligibility requirement for the deductions, so you should make sure you qualify.

One of the requirements of claiming a home office deduction is that the area of your home that you conduct business in has to be exclusively used for that purpose and must be designated for business functions. In addition to the aforementioned requirement, your home office must also adhere to the following guidelines: (more…)

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Five Helpful Tax Credits

February 28, 2015

There aren’t many things that can make you happy when it comes to paying taxes. But tax credits can help brighten your day lower your tax liability, it is a good idea to be informed which credits you qualify for and how you can go about claiming them. By using tax credits you lower the amount of taxes you owe for the tax year and some credit are even refundable to you. You can still receive a refund even if you don’t have to pay taxes if you qualify for a refundable credit. These five tax credit can help make tax time a little less financially stressful. (more…)

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Estimated Taxes Explained

February 27, 2015

Under certain circumstances, such as not having taxes withheld from your wages or paying too little each paycheck towards your taxes, you may be required to make estimated tax payments. At the same time, self-employed individuals generally pay taxes through estimated payments. (more…)

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Deducting Medical Expenses

February 26, 2015

If you wish to deduct the payment for any type of medical expense this year, you need to be aware of some new rules that apply to these types of deductions, as they can affect your return. If you are seeking medical or dental expenses deductions you should familiarize yourself with the following guidelines. (more…)

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Moderate income families understand that health insurance premiums can be expensive, but there are helpful tax credits that can offset some of the costs associated with them. In order for these credits to be claimed at tax time there are three requirements.

You must receive your coverage through the Health Insurance Marketplace. Plans can be chosen during the open enrollment period between November 15, 2014 and February 15, 2015.

Total household income needs to fall between a thresholds of one to four times the federally set poverty line. This base incomes is considered to be $23,850 to $94,400 annually for a four person family for the 2014 tax year.

Qualifying for a plan through other avenues such as Medicaid, Medicare, employer-sponsored coverage among other coverages will render to unable to receive the credit. (more…)

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Are you aware of the Alternative Minimum Tax? It’s important to know whether or not it applies to you, and what exactly it means at tax time. Taxpayers who have an annual income above a specified set amount may meet the guidelines required by the Alternative Minimum Tax. This tax strives to keep a minimum standard tax payment for individuals who claim certain credits. This tax season, you’ll want to keep the following information regarding the AMT in mind when filing your return. (more…)

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This tax year, many taxpayers will notice a new penalty if they chose to opt out of having health care coverage. This is due to new rules under the Affordable Care Act that state that all Americans must have health insurance. The penalties can be quite large. For example, a wealthy family of five can max out the penalty at $12,000 for this tax year. In 2015, the penalty will rise even more, and continue steadily rising even into 2016.

This is the first year the changes made by the passing of the Affordable Care Act in 2010, will go into effect. All health care covered is required to be approved, and Americans must enroll in an approved plan. Those who don’t will have to pay the penalty stated in the Individual Shared Responsibility Provision when they file their taxes. (more…)

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If you financially support your parents, the federal government wants to help. At tax time, there are a few different options for tax assistance that is available to those who provide parental support. The 2014 tax season brings a new dependency tax care credit, as well as the ability to claim a parent as a dependent. In doing so, you may have the option to write off any medical expenses that your parents incurred and you paid. There are certain requirements that you have to meet in order to claim your parent as a dependent, though, so check to make sure you understand the rules before filing your taxes.

Requirements For Dependent Claim

The IRS has a standard clause regarding the definition of a dependent. By the rule, you have to be responsible for over 50% of your parent’s yearly income if you want to classify your parent as a dependent. Mom or dad can reduce your taxable income by $3,950 if eligible to be a dependent. (more…)

Categories: Credits, Deductions, Dependents Tags: , , ,

Looking to make tax time a little brighter? Consider itemizing your taxes, which will allow you to claim interest you paid on your first and second mortgages. This deduction, worth up to $1.1 million in savings, includes mortgage loans (up to $1 million) and home-equity loans (up to $100,000). Even better, you don’t have to use the loans to improve the home’s condition.

These deductions can be substantial for homeowners with high mortgages. In neighborhoods with high home values, homeowners can use the tax benefit to their advantage if they have a mortgage greater than $625,000 ($417,000 in standard markets). What this means is that a couple in the 33% tax bracket, with an income less than $309,900, can reap a tax benefit of up to $9,900 on $30,000 of mortgage interest paid. (more…)

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