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|Posted on April 8, 2014 at 10:47 AM||comments (28)|
Top Tips on Making IRA Contributions
If you made IRA contributions or you’re thinking of making them, you may have questions about IRAs and your taxes. Here are some important tips from the IRS about saving for retirement using an IRA.
1. You must be under age 70 1/2 at the end of the tax year in order to contribute to a traditional IRA. There is no age limit to contribute to a Roth IRA.
2. You must have taxable compensation to contribute to an IRA. This includes income from wages and salaries and net self-employment income. It also includes tips, commissions, bonuses and alimony. If you’re married and file a joint return, generally only one spouse needs to have compensation.
3. You can contribute to an IRA at any time during the year. To count for 2013, you must make all contributions by the due date of your tax return. This does not include extensions. That means you usually must contribute by April 15, 2014. If you contribute between Jan. 1 and April 15, make sure your plan sponsor applies it to the right year.
4. In general, the most you can contribute to your IRA for 2013 is the smaller of either your taxable compensation for the year or $5,500. If you were age 50 or older at the end of 2013, the maximum you can contribute increases to $6,500.
5. You normally won’t pay income tax on funds in your traditional IRA until you start taking distributions from it. Qualified distributions from a Roth IRA are tax-free.
6. You may be able to deduct some or all of your contributions to your traditional IRA. Use the worksheets in the Form 1040A or Form 1040 instructions to figure the amount that you can deduct. You may claim the deduction on either form. Unlike a traditional IRA, you can’t deduct contributions to a Roth IRA.
7. If you contribute to an IRA you may also qualify for the Saver’s Credit. The credit can reduce your taxes up to $2,000 if you file a joint return. Use Form 8880, Credit for Qualified Retirement Savings Contributions, to claim the credit. You can file Form 1040A or 1040 to claim the Saver’s Credit.
|Posted on March 31, 2014 at 11:40 AM||comments (0)|
April 15 is upon us! If you’re not an early bird who files your taxes super early you might be dragging your feet getting your taxes prepared. If you haven’t sprinted to file yet in fear of what you might owe, take a look at these tips of things you should avoid, and hopefully you’re tax season won’t be as bad as you had imagined!******************Failure to organize********************************************************
Preparing for your taxes is one aspect of life that you should always have under complete control. Once one tax season ends a new file should always be started. My filing cabinet has a manila folder with each tax year written on it. It is important to save files for every tax season because legally the IRS has three years to audit your tax return or to assess any additional tax. There are also exceptions to the three year statute of limitations that allow the IRS six plus years, so it’s always a good practice to save your files as long as possible.*******************Reporting Incorrect Income********************************************
It is extremely important you accurately report how much income you receive throughout the year. When you receive your W-2, your employer has sent an exact copy of this document to the IRS as well. In order to avoid a red flag at the IRS, you want to make sure the income you are reporting on your tax return matches up with what you actually received. Your income level minus all deductions you have in the year is used to figure out what tax bracket you fall into. This will determine your taxable income, and with that information your adjusted gross income is calculated.
Bonus tip: Hold on to your W-2 when you are looking at buying a home. These are important documents required to establish employment history as well as qualify you for a loan!*****************Filing the Wrong Status***************************************************
Make sure you are filing the correct status. This can have a direct impact on getting a refund or owing additional money to the IRS. If you are an adult and do not have children or a spouse to claim, file as single. However, make sure if you are a single parent to file as “head of household” instead of “single”. For more information on how to determine your filling status, take the filling status assessment here!************Not Considering Itemizing Over a Standard Deduction********************
Itemizing deductions is generally more beneficial for a person who has a higher income or several major assets. However, you should look at both options before deciding which works best for you. Many factors including: medical expenses, real estate taxes, and charitable donations can all add up and might make it significantly more beneficial for you to file itemized instead of taking the standard deduction. It is important to note that the standard deduction is different for all filling statuses (single, MFJ, MFS, HOH) and every year the amount is different, so make sure to ask your tax preparer!*******************Not Taking Full Advantage of Tax Breaks****************************
Make sure to educate yourself on the new tax laws and deductions for the current tax season. Your tax preparer should already be familiar with any new changes for the New Year but you can also do your own research, by checking out publication 17 which the IRS creates every year with all new tax laws.
For any questions regarding how you should file please visit Irs.gov
Please feel free to share this blog with your friends and family. (Reposted with permission from New Century Funding)
|Posted on February 8, 2014 at 1:16 PM||comments (0)|
|Posted on February 8, 2014 at 11:59 AM||comments (0)|
ARE YOUR CHARITABLE CONTRIBUTIONS DEDUCTIBLE?
Tax Season IS HERE and it is time to gather up all those tax documents for your upcoming tax appointment! Did you make any charitable donations this year? How do you know what is deductible?
Five Helpful Tips on Charitable Contributions
For additional information on this subject, please visit the following:
|Posted on February 3, 2014 at 11:26 AM||comments (0)|
You can generally use the 1040EZ if:
The 1040A may be best for you if:
However, reasons you must use the 1040 include:
Posted By Julie Standish EA MBA to ALL STAR TAX SOLUTIONS at 2/02/2014 08:48:00 PM
|Posted on February 3, 2014 at 11:22 AM||comments (0)|
Can Same Sex Married Couples File a Joint Tax Return? Amend 2011 and 2012 Filed Returns?
For federal tax purposes, same sex couples who are married under state law are considered married for federal purposes. This includes not only income taxes but also gift and estate taxes.
The ruling applies to any same-sex marriage legally entered into in one of the 50 states, the District of Columbia, a U.S. territory, or a foreign country (!). However, the ruling does not apply to registered domestic partnerships, civil unions, or similar formal relationships recognized under state law.
For filing purposes, this means that the choices for legally-married same-sex couples are now the same as anyone else: single; married filing jointly; married filing separately; head of household and qualifying widow(er) with dependent child. It also means that individuals who were in same-sex marriages may, but are not required to, file original or amended returns choosing to be treated as married for federal tax purposes for one or more prior tax years still open under the statute of limitations. Forstatute of limitations purposes, refund claims can generally be filed for tax years 2010, 2011, and 2012 (some exceptions apply). If you’re not sure about the statute of limitations – or whether it makes good tax sense to file an amended return – please contact us at [email protected] or call us at (714) 879-2747
Posted By Julie Standish EA MBA to ALL STAR TAX SOLUTIONS at 2/03/2014 07:04:00 AM
|Posted on June 28, 2013 at 10:49 AM||comments (3)|
Here is a very informative article on what is happening within the IRS and how it is affecting tax payers.
Taxpayer Advocate Says IRS ‘in Crisis’
Calls for more tax preparer regulation
washington, D.C. (June 26, 2013)
By Jeff Stimpson
National Taxpayer Advocate Nina Olson’s latest mid-year report to Congress calls the IRS “an institution in crisis,” with its many problems affecting its ability to conduct its mission.
While acknowledging the scandals currently engulfing the tax service, the report states, “The real crisis facing the IRS … is a radically transformed mission coupled with inadequate funding to accomplish that mission. As a consequence of this crisis, the IRS gives limited consideration to taxpayer rights or fundamental tax administration principles as it struggles to get its job done.”
The wide-ranging report identifies priorities that the Taxpayer Advocate Service will address during the upcoming fiscal year. Among them:
•Adequate oversight of the tax return preparer industry, and relieving financial harm suffered by victims of preparer fraud;
•Resolving erroneous revocations of the tax-exempt status of small Section 501(c)(3) organizations and failing to provide them with a pre-revocation administrative appeal;
•Effective, timely and taxpayer-centric relief to victims of ID theft; and,
•A congressionally enacted Taxpayer Bill of Rights.
Olson also released a special report examining the IRS’s use of questionable criteria to screen applicants for tax-exempt status.
Reiterating her longtime support for regulation of return preparers, Olson said that last January’s U.S. District Court Loving decision, which disagreed with the IRS’s view that it has the authority to implement RTRP requirements on its own, “is based in part on an outdated understanding of return preparation and filing. The return preparation industry has changed substantially over the last few decades as a result of the ready availability of return preparation software, refundable credits and refund-based loans.”
“The National Taxpayer Advocate’s main focus continues to be the retention of minimum standards for return preparation,” the report added. “The reinstatement or reissuance of the IRS preparer oversight rules would promote tax compliance by imposing minimum competency standards. In addition, questionable preparers would have less opportunity and incentive to engage in misconduct or fraud.”
“The National Taxpayer Advocate is concerned that taxpayers remain vulnerable to incompetent or unscrupulous preparers,” the report read, with an additional stress on taxpayers sharply questioning preparers about their qualifications and experience in preparing returns.
Olson’s report also urged Congress restore funding for IRS employee training, which has been cut by 83 percent since 2010.
Exempt Organization Review and a Bill of Rights
Taking a self-described “broad look” at factors contributing to the use of questionable screening criteria and processing delays regarding tax-exempt organizations, the report groups the contributing factors into four categories:
1. Lack of guidance and transparency;
2. Absence of adequate checks and balances;
3. Management and administrative failures; and,
4. EOs’ “cultural difficulty” with TAS.
IRS employees are offered “little guidance” to determine whether an organization qualifies for tax-exempt status, according to the report.
“The advocate recommends that Congress or the Treasury Department provide clearer standards,” the report adds, also noting that if an organization’s application for Section 501(c)(3) status is rejected or not answered after 270 days, the organization may go to court to request a declaratory judgment; applicants for Section 501(c)(4) status have no such right. Additionally, the application form for section 501(c)(4) organizations does not ask “key” questions.
The report also noted a number of other challenges facing the IRS:
•Effective, timely collection alternatives to minimize taxpayer burden while reducing the number and dollar amount of balance-due accounts;
•Education and outreach to taxpayers about their responsibilities under the Affordable Care Act; and,
•“Less draconian and more reasonable ‘settlement initiatives’ for the millions of taxpayers who have legitimate reasons for overseas bank and financial accounts and whose failure to file reports was merely negligent.”
|Posted on November 7, 2012 at 3:36 PM||comments (1)|
November 7, 2012
Yesterday was a day that the taxpayers’ of California decided to raise state tax for taxpayer’s who make $250,000.00 and above per year retroactive to January 1, 2012.
The sales tax will also be raised to 7.5% from 7.25% starting January 1, 2013.
Retroactive tax increase passes (11-07-12)
Proposition 30 retroactively increases income taxes effective January 1, 2012. The following rate increases are effective for seven years:
Governor's Ballot Initiative10.3% (1% increase) on income of:$250,001–$300,000 for single/MFS;
$340,001–$408,000 for HOH; and
$500,001–$600,000 for MFJ.11.3% (2% increase) on income of:$300,001–$500,000 for single/MFS;
$408,001–$680,000 for HOH; and
$600,001–$1,000,000 for MFJ.12.3% (3% increase) on income of:More than $500,000 for single/MFS;
More than $680,000 for HOH; and
More than $1,000,000 for MFJ.
(Note: Income in excess of $1 million is also subject to the 1% mental health surcharge.)
Proposition 30 also increases the state sales tax rate by 0.25% for four years, beginning January 1, 2013, bringing the standard statewide rate to 7.50% (currently 7.25%).
Proposition 39, the single sales factor mandate, passed, so most multistate corporations will be required to use the single sales factor in 2013.