The Treasury and IRS has issued some initiatives for retirement and savings. Listed below are a few ways to help save for the future and retirement.
1. Automatic enrollment in retirement plans- The US Treasury and IRS has issued guidance for employers to add automated enrollment in their 401(K) or SEP IRA plans to boost up savings and retirement.
2. Receive your tax refund as a U.S. Savings Bond- For the 2010 tax season, taxpayers will be able to convert their income tax refunds into I Savings Bonds
3. Unused vacation days- The Treasury and the IRS have issued guidance where for those employees who receive cash payment for unused vacation days (or other similar leave) at the end of the year or at termination of employment. These guidelines addresses the amount the employee is entitled to receive for the unused days to be put in by the employer in employee’s retirement plan as employer contribution or elective 401(K) contributions.
Source: http://www.irs.gov/retirement/article/0,,id=212061,00.html
Thursday, September 10, 2009
Tuesday, September 8, 2009
Did you have a child this year?.. You may be able to qualify for child tax credit and reduce your tax liability.
Did you have a child this year? You may be able to qualify for child tax credit and reduce your tax liability up to $1,000 per qualifying child. A qualifying child is someone who meets the following:
1. Was under the age of 17 by 12/31/08
2. The child is your son, daughter, step child, adopted child, eligible foster child, brother, sister or a descendant of any of these individuals
3. The child did not provide over 50% of their own support
4. Lived with you for more than 50% of 2008.
5. Is a US citizen, US national or a US resident
There are exceptions to the general rule and the credit amounts are phased-out after certain income levels.
1. Was under the age of 17 by 12/31/08
2. The child is your son, daughter, step child, adopted child, eligible foster child, brother, sister or a descendant of any of these individuals
3. The child did not provide over 50% of their own support
4. Lived with you for more than 50% of 2008.
5. Is a US citizen, US national or a US resident
There are exceptions to the general rule and the credit amounts are phased-out after certain income levels.
Monday, September 7, 2009
Tax tips for sudents
It's back to school time and many students will be going back to school. Below are several of tax tips.
1. Scholarships may qualify to be tax-free if you are a candidate for a degree at an eligible institution and the scholarships are used for qualified education expenses. Expenses such as room, board and travel generally do not qualify.
2. Textbook Tax credit- The credit will give students up to $2,500 for their out-of-pocket expenses, focusing on textbooks. The first $2,000 in out-of-pocket expenses goes toward the tax credit and is returned.
3. The American Opportunity Credit is available and allows more flexibility for taxpayers to qualify for this credit. For 2009, the Hope credit has changed substantially. Prior to 2009, the credit would apply only to the first 2 yrs of college. Now, the credit applies to all 4 yrs of college. In addition, the credit increased to $2,500 (100% of the first $2K of qualified expenses plus 25% of the next $2k of qualified expenses for a total of $2,500). Any amount more than $2,000 will have 25% of the remaining expenses paid back up to $2,500. Another change to this credit is that up to 40% of the credit is refundable. This means that whether or not you owe taxes, you may still qualify to receive up to $1,000.
1. Scholarships may qualify to be tax-free if you are a candidate for a degree at an eligible institution and the scholarships are used for qualified education expenses. Expenses such as room, board and travel generally do not qualify.
2. Textbook Tax credit- The credit will give students up to $2,500 for their out-of-pocket expenses, focusing on textbooks. The first $2,000 in out-of-pocket expenses goes toward the tax credit and is returned.
3. The American Opportunity Credit is available and allows more flexibility for taxpayers to qualify for this credit. For 2009, the Hope credit has changed substantially. Prior to 2009, the credit would apply only to the first 2 yrs of college. Now, the credit applies to all 4 yrs of college. In addition, the credit increased to $2,500 (100% of the first $2K of qualified expenses plus 25% of the next $2k of qualified expenses for a total of $2,500). Any amount more than $2,000 will have 25% of the remaining expenses paid back up to $2,500. Another change to this credit is that up to 40% of the credit is refundable. This means that whether or not you owe taxes, you may still qualify to receive up to $1,000.
Monday, August 31, 2009
Importance of recordkeeping and documentation
It is very important to keep accurate records and documentations from all income and expense related to your tax returns for individuals and small businesses.
The following are the common areas where individual taxpayers should be aware of:
1. receipts
2. mileage logs
3. credit card and bank statements
4. broker statements
5. home purchase.improvement records
6. home rental records
7. other records that will support your deductions/credits
The following are common areas where small business taxpayers should be aware of:
1. employment/payroll tax records
2. supporting documentations related to expenses
3. supporting documentations related to income
4. bank statements, credit card statements, cash register, canceled checks, etc.
It is always good to have more than enough documentation. When your return gets selected for further questioning, having proper recordkeeping and documentation may avoid headaches when you can provide the items in question.
source: http://www.irs.gov/newsroom/article/0,,id=172250,00.html
The following are the common areas where individual taxpayers should be aware of:
1. receipts
2. mileage logs
3. credit card and bank statements
4. broker statements
5. home purchase.improvement records
6. home rental records
7. other records that will support your deductions/credits
The following are common areas where small business taxpayers should be aware of:
1. employment/payroll tax records
2. supporting documentations related to expenses
3. supporting documentations related to income
4. bank statements, credit card statements, cash register, canceled checks, etc.
It is always good to have more than enough documentation. When your return gets selected for further questioning, having proper recordkeeping and documentation may avoid headaches when you can provide the items in question.
source: http://www.irs.gov/newsroom/article/0,,id=172250,00.html
Friday, August 28, 2009
Check your withholdings to avoid any surprise
If you're an employee, your employer is required to withhold taxes (FICA, FUTA, etc.) from your paycheck. The amount your employer withholds from your paycheck depends on how many exemptions you claim on your w4 when you started the job.
Did you have a baby? Did you get a divorce? Did you get married? These are all occurances that happens but we do not think about the tax implications of these matters. Check your withholdings and adjust accordingly to reduce your chances any tax surprises at year end. Below is link to the IRS website with the withholdings calculator.
http://www.irs.gov/individuals/page/0,,id=14806,00.html
source: http://www.irs.gov/newsroom/article/0,,id=210152,00.html
Did you have a baby? Did you get a divorce? Did you get married? These are all occurances that happens but we do not think about the tax implications of these matters. Check your withholdings and adjust accordingly to reduce your chances any tax surprises at year end. Below is link to the IRS website with the withholdings calculator.
http://www.irs.gov/individuals/page/0,,id=14806,00.html
source: http://www.irs.gov/newsroom/article/0,,id=210152,00.html
Tuesday, August 25, 2009
Were you a victim of a natural disaster or theft this year? Here are some tax tips:
If you're a victim of a natural disaster or theft this year, then here are several things you should be aware of:
1. In order to qualify to claim deductions for casualty and theft loss, you must itemize your return on Schedule A.
2. Disaster damages are not minor wear and tear "damage" of the property. It must be substantial, sudden, unusual and unexpected.
3. Generally, casualty and theft losses covered by insurance is not deductable, unless the amount of loss is greater than the reimbursement by the insurance and the taxpayer files timely.
4. The deduction is generally the lesser of your adjusted basis or the decrease in value of the property.
5. If it's personal property, then your loss is subject to 10% AGI limitation and also further reduced by additional $500. If it's business property, then your loss is your adjusted basis, less salvage value, less reimbursement from insurance and the additional $500 reduction and 10% does not apply.
6. Different rules apply to "Federally-Declared Disaster" areas.
source: http://www.irs.gov/newsroom/article/0,,id=212012,00.html
1. In order to qualify to claim deductions for casualty and theft loss, you must itemize your return on Schedule A.
2. Disaster damages are not minor wear and tear "damage" of the property. It must be substantial, sudden, unusual and unexpected.
3. Generally, casualty and theft losses covered by insurance is not deductable, unless the amount of loss is greater than the reimbursement by the insurance and the taxpayer files timely.
4. The deduction is generally the lesser of your adjusted basis or the decrease in value of the property.
5. If it's personal property, then your loss is subject to 10% AGI limitation and also further reduced by additional $500. If it's business property, then your loss is your adjusted basis, less salvage value, less reimbursement from insurance and the additional $500 reduction and 10% does not apply.
6. Different rules apply to "Federally-Declared Disaster" areas.
source: http://www.irs.gov/newsroom/article/0,,id=212012,00.html
Monday, August 24, 2009
Do you donate to charitable organizations? Here are some tax tips regarding chartibale contributions-
1. In order to receive charitable contribution deduction, you must itemize your deductions using Schedule A.
2. Make sure the organization is a bonafide qualified organization.
3. Keep good records, receipts and documentations.
4. Contributions of $250 or more must have a written acknowldgement from the organization.
5. If you contributed a non-cash item with a fair value of $500 or more, you must complete Form 8283 and attach with your return.
source: http://www.irs.gov/newsroom/article/0,,id=172936,00.html
2. Make sure the organization is a bonafide qualified organization.
3. Keep good records, receipts and documentations.
4. Contributions of $250 or more must have a written acknowldgement from the organization.
5. If you contributed a non-cash item with a fair value of $500 or more, you must complete Form 8283 and attach with your return.
source: http://www.irs.gov/newsroom/article/0,,id=172936,00.html
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