The IRS Reminds Parents of Ten Tax Benefits
1. Dependents In most cases, a child can be claimed as a dependent in the year they were born. For more information see IRS Publication 501, Exemptions, Standard Deduction, and Filing Information.
2. Child Tax Credit You may be able to take this credit for each of your children under age 17. If you do not benefit from the full amount of the Child Tax Credit, you may be eligible for the Additional Child Tax Credit. For more information see IRS Publication 972, Child Tax Credit.
3. Child and Dependent Care Credit You may be able to claim this credit if you pay someone to care for your child or children under age 13 so that you can work or look for work. See IRS Publication 503, Child and Dependent Care Expenses.
4. Earned Income Tax Credit The EITC is a tax benefit for certain people who work and have earned income from wages, self-employment or farming. EITC reduces the amount of tax you owe and may also give you a refund. IRS Publication 596, Earned Income Credit, has more details.
5. Adoption Credit You may be able to take a tax credit for qualifying expenses paid to adopt an eligible child. If you claim the adoption credit, you must file a paper tax return with required adoption-related documents. For details, see the instructions for IRS Form 8839, Qualified Adoption Expenses.
6. Children with earned income If your child has income earned from working, they may be required to file a tax return. For more information, see IRS Publication 501.
7. Children with investment income Under certain circumstances a child’s investment income may be taxed at their parent’s tax rate. For more information, see IRS Publication 929, Tax Rules for Children and Dependents.
8. Higher education credits Education tax credits can help offset the costs of higher education. The American Opportunity and the Lifetime Learning Credits are education credits that can reduce your federal income tax dollar-for-dollar. See IRS Publication 970, Tax Benefits for Education, for details.
9. Student loan interest You may be able to deduct interest paid on a qualified student loan, even if you do not itemize your deductions. For more information, see IRS Publication 970.
10. Self-employed health insurance deduction If you were self-employed and paid for health insurance, you may be able to deduct any premiums you paid for coverage for any child of yours who was under age 27 at the end of the year, even if the child was not your dependent. For more information, see the IRS website.
Forms and publications on these topics are available at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).
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Are you a stay-at-home parent looking for a way to make extra money and have a flexible
schedule? Are you in-between jobs? In school? Or maybe you’re retired.
Tax season is a never-ending annual event that most individuals dread.
With TAX-SMART SCHOOL you can take this event by the horns and turn it into a use-full life long skill and an additional source of income.
In TAX-SMART SCHOOL you will gain many things like:
- Knowledge
- Experience
- Confidence
You will be able to provide information and answer questions, as-well as help others to understand
their tax situations. Earn an EXCELLENT hourly wage, PLUS commission during tax season.
You may also earn a $500 bonus
Does this sound like an opportunity you would like to learn more about?
Give us a call at:
928-348-0146 or Charity Burns at:
928-701-2650
Classes will be held in the evenings.
Tax Smart School
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What can you Expect from your 2011 Tax Return?
The 2010 Tax Season May Have Come to a Close, But It’s Never
Too Early to Start Thinking About Next Year!
With all of the changes that were put in place to help stimulate the economy
last year, what impact might they have in the next year. Should you expect to
pay more or less taxes in 2011?
Some early predictions on what may change and what is likely to stay the
same for next year:
• New Vehicle Credit — This tax provision, which allowed taxpayers to
take the itemized deduction on sales tax paid for a new vehicle purchase,
has expired.
• State and Local Sales Tax Deduction — Unless Congress decides to
extend it, taxpayers who itemized will no longer be allowed to deduct state
and local sales taxes, as this provision expired December 31, 2009.
• Medicare Tax — Although the healthcare reform bill included a
number of tax provisions that will affect individual taxpayers and employers,
particularly an added Medicare tax on higher-income individuals, the
changes will not apply until 2013.
• Unemployment Benefits — For 2009, the first $2,400 of
unemployment benefits were tax exempt. This tax benefit will not be
available to those unemployed in 2010 unless Congress votes to extend it.
• Gift Tax Exclusion — As inflation remained largely flat from 2009 to
2010, the annual gift-tax exclusion should remain unchanged. That means
that individuals can “gift” up to $13,000 per person (to as many
individuals as desired) without any tax considerations.
• Alternative Minimum Tax (AMT) Exemption Rollbacks — New
scaled back exemption rates for 2010 are expected to affect an astounding
one in five taxpayers. The scaled back exemptions for 2010 are:
$33,750 for single taxpayers; $45,000 for married tax payers filing jointly
or qualifying widower(s); and $22,500 for married filing separately.
• Making Work Pay Credit — Part of the American Recovery and
Reinvestment Act, this credit provides taxpayers with a refundable tax
credit of up to $400 for qualified working individuals and up to $800 for
qualified married couples filing jointly. Despite criticism on the way this
credit was handled in its first year, it will continue in 2010.
These are just a few of the things that can directly impact your 2010 tax
return. Contact your Jackson Hewitt office to see if you need to make any
adjustments now, to put you in a better position for the next tax season.
What to know about the First-Time Home Buyer Credit
Did you know that the IRS is offering a credit of up to $8,000 for First-Time Home Buyers? Below are the basics.
First-time homebuyers may be able to take advantage of a tax credit for homes purchased in 2008 or 2009. The credit:
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Applies to purchases that close after April 8, 2008, and before Dec. 1, 2009.
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Applies only to homes used as a taxpayer’s principal residence.
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Reduces a taxpayer’s tax bill or increases his or her refund, dollar for dollar.
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Is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.
For 2008 Home Purchases
The Housing and Economic Recovery Act of 2008 established a tax credit for first-time homebuyers that can be worth up to $7,500. For homes purchased in 2008, the credit is similar to a no-interest loan and must be repaid in 15 equal, annual installments beginning with the 2010 income tax year.
For 2009 Home Purchases
The American Recovery and Reinvestment Act of 2009 expanded the first-time homebuyer credit by increasing the credit amount to $8,000 for purchases made in 2009 before Dec. 1.
For home purchased in 2009, the credit does not have to be paid back unless the home ceases to be the taxpayer’s main residence within a three-year period following the purchase.
First-time homebuyers who purchase a home in 2009 can claim the credit on either a 2008 tax return, due April 15, 2009, or a 2009 tax return, due April 15, 2010. The credit may not be claimed before the closing date. But, if the closing occurs after April 15, 2009, a taxpayer can still claim it on a 2008 tax return by requesting an extension of time to file or by filing an amended return.
So, what does all this mean? Simply put if you have not owned a home for the past 3 years and you decide to purchase a new home you will get a 10% tax credit up to $8000 back at the end of the year. What a fantastic time to buy that dream home and a credit unlike a deduction will give you money back at the end of the year. Stop in to our office or give us a callwith any questions.
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