Taxpayers living in rural communities should be aware of the earned income tax credit and correctly claim it if they qualify.
Our office can guide you. Feel free to contact our office at (678) 382-0444 for a no-obligation consultation.
Many qualified individuals and families who live in rural areas don’t claim the EITC. There are many reasons for this. They may:
• Think they are ineligible.
• Not know about the credit.
• Not think they made enough money to qualify.
• Worry about paying for tax preparation services.
The average household income in many small towns and rural areas is below the national average. Because of this, many of these taxpayers may qualify for EITC.
Here are some things that people living in these areas should remember about the credit and how it can benefit them:
• Because it’s a refundable tax credit, those who qualify and claim the credit could pay less federal tax, pay no tax or even get a tax refund.
• An eligible taxpayer must have earned income from employment or owning a business or farm and meet basic rules.
• To get the credit, taxpayers must file a tax return, even if they don’t owe any tax or aren’t required to file.
• Single workers without a qualifying child who earn less than $15,010 may qualify for a smaller amount of the credit.
• There are special rules for individuals receiving disability benefits and for members of the military.
By law, the IRS cannot issue refunds before mid-February for tax returns that claim the EITC or the additional child tax credit. The law requires the IRS to hold the entire refund — even the portion not associated with the EITC or ACTC. The IRS expects the earliest EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards starting Feb. 27, 2018, if these taxpayers choose direct deposit and there are no other issues with their tax return.
It is critical that taxpayers correctly determine eligibility for exemptions..
Feel free to contact our office at (678) 382-0444 for a no-obligation consultation.
Most taxpayers can claim one personal exemption for themselves and, if married, one for their spouse. This helps reduce their taxable income on their 2017 tax return. They may also be able to claim an exemption for each of their dependents. Each exemption normally allows them to deduct $4,050 on their 2017 tax return. While each is worth the same amount, different rules apply to each type.
Here are five key points for taxpayers to keep in mind on exemptions and dependents when filing their 2017 tax return:
1. Claiming Personal Exemptions. On a joint return, taxpayers can claim one exemption for themselves and one for their spouse. If a married taxpayer files a separate return, they can only claim an exemption for their spouse if their spouse meets all of these requirements. The spouse:
3. Dependents Cannot Claim Exemption. If a taxpayer claims an exemption for their dependent, the dependent cannot claim a personal exemption on their own tax return. This is true even if the taxpayer does not claim the dependent’s exemption on their tax return.
4. Dependents May Have to File a Tax Return. This depends on certain factors like total income, whether they are married, and if they owe certain taxes.
5. Exemption Phase-Out. Taxpayers earning above certain amounts will lose part or all the $4,050 exemption. These amounts differ based on the taxpayer’s filing status.
It is critical that business owners correctly determine whether the individuals providing services are employees or independent contractors.
Feel free to contact our office at (678) 382-0444 for a no-obligation consultation.
Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors.
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Five Things to Remember about Hobby Income and Expenses
From scrapbooking to glass blowing, many Americans enjoy hobbies that are also a source of income. A taxpayer must report income on their tax return even if it is made from a hobby.
However, the rules for how to report the income and expenses depend on whether the activity is a hobby or a business. There are special rules and limits for deductions taxpayers can claim for hobbies. Here are five things to consider:
Five Facts about Charitable Contributions
With the holidays around the corner, many people will be making donations to benefit charitable organizations. However, come tax time, the person who made the donation might also benefit. That’s because taxpayers who donate to a charity may be able to claim a deduction for the donation on their federal tax return.
Here are five facts about charitable donations:
Qualified Charities. A taxpayer must donate to a qualified charity to deduct their contributions. Gifts to individuals, political organizations, or candidates are not deductible. To check the status of a charity, taxpayers can use Exempt Organizations Select Check on IRS.gov.
Itemize Deductions. To deduct charitable contributions, taxpayers must file Form 1040 and itemize their deductions. To do this, taxpayers complete Schedule A, Itemized Deductions. They file this form with their tax return.
Getting Something in Return. Taxpayers may receive something in return for their donation. This includes things such as merchandise, meals, and event tickets. Taxpayers can only deduct the amount of the donation that’s more than the fair market value of the item they received. To figure their deduction, a taxpayer would subtract the value of the item received from the amount of their donation.
Type of Donation. For donations of property instead of cash, a taxpayer can only deduct the fair market value of the donated item. Fair market value is generally the price they would get if they sold the item on the open market. If they donate used clothing and household items, those items generally must be in good condition. Special rules apply to certain types of property donations, such as cars and boats.
Donations of $250 or More. If a taxpayer donates $250 or more in cash or goods, they must have a written receipt from the charity. The statement must show: • The amount of the donation. • A description of any property given. • Whether the taxpayer received any goods or services in exchange for their gift, and, if so, must provide a description and good faith estimate of the value of those goods or services.
Taxpayers can also use the Interactive Tax Assistant, Can I Deduct my Charitable Contributions? This tool helps determine if charitable contribution is deductible.
With 10 million taxpayers a year facing estimated tax penalties, the IRS offers some simple tips to help prevent a surprise at tax time.
People pay taxes on income through withholding on their paycheck or through estimated tax payments. Taxpayers who pay enough tax throughout the year can avoid a large tax bill and penalties when they file their return.
Taxpayers should make estimated tax payments if:
Spencer Hostetter, CPA says "Small Business is my passion". Call (678) 382-0444 for a free 30 minute consultation on your business.
Four Things to Know about Taxes and Starting a Business
New business owners have tax-related things to do before launching their companies. Spencer Hostetter, CPA has resources to help. Here are some items to consider before scheduling a ribbon-cutting event.
Choose a business structure
When starting a business, an owner must decide what type of entity it will be. This type determines which tax forms a business needs to file. Owners can learn about business structures at IRS.gov. The most common forms of businesses are:
The type of business someone operates determines what taxes they need to pay and how to pay them. There are the five general types of business taxes.
Businesses typically figure their taxable income based on a tax year of 12 consecutive months. A tax year is an annual accounting period for keeping records and reporting income and expenses. The options are:
Being organized helps businesses owners be prepared for other tasks. Good recordkeeping helps a business monitor progress. It also helps prepare financial statements and tax returns. See IRS.gov for recordkeeping tips.
Gifts to Charity: Six Facts About Written Acknowledgements
Throughout the year, many taxpayers contribute money or gifts to qualified organizations eligible to receive tax-deductible charitable contributions.
It can be a confusing issue for many of your contributors.
We invite them to contact our office for a free, no-obligation consultation to get ready for 2018.
Taxpayers who plan to claim a charitable deduction on their tax return must do two things:
Taxpayers who get an unexpected or unsolicited phone call from the IRS should be wary – it’s probably a scam. Phone calls continue to be one of the most common ways that thieves try to get taxpayers to provide personal information. These scammers then use that information to gain access to the victim’s bank or other account.
When a taxpayer answers the phone, it might be a recording or an actual person claiming to be from the IRS. Sometimes the scammer tells the taxpayer they owe money and must pay right away. They might also say the person has a refund waiting, and then they ask for bank account information over the phone.
Taxpayers should not take the bait and fall for this trick. Here are several tips that will help taxpayers avoid becoming a scam victim.
The real IRS will not:
IRS YouTube Videos:
Seven Reminders for Taxpayers Filing Their 2016 Tax Returns by Oct. 16
Every year, millions of taxpayers ask for an extra six months to file their taxes. These taxpayers should have paid the tax they owed by the April deadline, but those who requested an extension should mark Monday, Oct. 16 as the extension deadline for 2017. While the deadline normally falls on Oct. 15, that date falls on a Sunday this year so the due date is moved to the next business day.
Here are seven reminders for taxpayers who have not yet filed:
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