Tax Tip - Children
The Child Tax Credit is a $1,000 per child under the age of 17. There is also the Earned Income Credit which can be as high as $6,100. Working parents with children under 13 years old may qualify for the Child and Dependent Care Credit. The IRS allows a credit up to 35% of your daycare costs. If you have one child you can claim up to $3,000 worth of daycare expenses, and $6,000 if you have more than one child in daycare. The rules on who qualifies as a child are more complicated than they should be and most of these credits are going to have income limitations so make sure you contact a tax professional to find out if you qualify.
Tax Tip - Rentals
Turning a home into a rental unit can help cover the carrying costs and at the same time produce a good tax deduction. Up to $25,000 worth of rental losses may be deductible each year which can make a big difference on your tax return. Real estate taxes and mortgage interest are a couple examples of deductible expenses. In addition you are also able to write off the cost of insurance, utilities, repairs and even mileage. All these expenses reduce the rental income you are receiving from your tenant. It is important to contact a tax professional to find out if you qualify.
Tax Tip - Education
The American Opportunity Tax Credit is a credit for 100% of the first $2,000 of qualified education expenses. The total credit can be as high as $2,500 and 40% refundable. Eligible expenses include book and supplies in addition to tuition. Even if you took out loans to help pay for college you can qualify for the credit this year. There are certain restrictions so make sure you contact a tax specialist to find out if you qualify.
Tax Tip - Retirement Savings
If you make a retirement plan contribution you could qualify for a credit of up to $2,000. The credit ranges from 10% all the way up to 50% of what you contribute into your retirement plan. If your income is less than approximately $60,000 for a married couple or $30,000 for a single person this credit might work for you. Even though we are now into 2015 you are still allowed to create and contribute to certain retirement plans. This is one of those few cases where you can consult with your tax professional and make a decision that will impact your 2014 tax return during 2015.
Tax Tip - Affordable Care Act (Obamacare)
The time has come where the Affordable Care Act also know as Obamacare is affecting every person that files a tax return. Beginning in 2014 individuals were required to maintain certain levels of medical insurance in order to avoid an additional charge when filing their tax returns. If you purchased insurance through the marketplace you will be receiving a government form that is essential to completing your taxes. When filing your taxes you are going to reconcile the cost of insurance, your actual income during the year and any subsidy you have received to determine if you are eligible for an additional tax credit or you might be required to pay back some of the money you already received.
Tax Tip - Vehicles
If you used your car in the act of charity during 2014 you are allowed to deduct 14 cents per mile. You can deduct 23.5 cents per mile for the use of your vehicle in association with medical or moving travel. Business mileage is the highest of all deductible travel at 56 cents per mile for 2014. At over 50 cents per mile this deduction can add up quickly so don't forget to contact one of our tax professionals to find out if you qualify for this deduction.
Tax Tip - Job Hunting Expenses
The IRS allows a miscellaneous itemized deduction for expenses incurred while searching for a new job in your current line of work. Fees paid to recruiters, costs of producing your resume, as well as any advertising you might have done are all examples of expenses that qualify. In addition, local and out of town travel expenses are deductible while traveling for interviews. Your expenses are deductible whether or not you found employment. You do have to itemize in order to claim these expenses and there are certain income limitations that apply so make sure to contact one of our tax professionals to find out if this deduction will work for you.
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Pursuant to requirements imposed by the Internal Revenue Service, any tax advice contained in this communication (including any attachments) is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the United States Internal Revenue Code or promoting, marketing or recommending to another person any tax-related matter.