Tax Deduction of the Week: Job Hunting Expenses

The Roni Deutch Tax Center – Tax Help Blog published another great tax deduction of the week entry earlier this week. The new article explains deductions available for certain job hunting expenses. You can find a section of the post below, or check out the full text at RDTC.com.

Looking for a new job? In addition to the deduction available to taxpayers who have to move for a new job, you can also deduct qualifying expenses related to your search for employment.

2% Rule

If you are looking for a position in the same line of work that you are currently in, then many of your expenses can be deducted. You do not need to be out of work to have an expense qualify, but your deduction is limited by the 2% rule. Therefore, you can only deduct expenses that exceed 2% of your income.

IRS Restrictions

According to IRS Publication 529, you cannot deduct your job hunting expenses if:

• You are looking for a job in a new occupation,
• There was a substantial break between the ending of your last job and your looking for a new one, or
• You are looking for a job for the first time.

Common Business Tax Myths Debunked

Last week the Roni Deutch Tax Center – Tax Help Blog posted a new article debunking a handful of common business tax myths. I have included a of the myths below, but be sure to check out the full text at RDTC.com.

1. My accountant is liable for any mistakes on my return

Although you may hire a professional to prepare your tax returns, you are still responsible for filing a correct return with the IRS. Even though an accountant or tax preparer may complete and file your return, they will not be held liable for any mistakes, you will be. To avoid any problems, you should at least have a basic understanding of business tax laws, and always review your return before you sign it.

2. Itemizing is only for the rich

Unfortunately, many taxpayers (both those that are self-employed and those who work for an employer) assume that only wealthy people should bother itemizing their deductions. The truth is that filing an itemized return can benefit all types of taxpayers, at many different income levels. Itemizing is especially helpful for self-employed taxpayers, as there are dozens of business-related deductions you can qualify for. If you are unsure about itemizing, then you can prepare one return itemized and one return using the standard deduction, and compare the results.

3. I know I saved because I prepared my own return

Although preparing your own return will save you from having to pay your accountant or tax professional, you might be putting yourself at risk. Tax laws are always changing, which can make it hard to keep up with new credits, deductions, and qualification rules. A tax professional spends their career studying tax law changes. Therefore, unless you are confident about your tax knowledge, you might want to consider seeking help from a professional.

4. Only big business needs to collect sales taxes

It is unfortunate that any business owners believe this myth. Studies show that a number of business owners have used this excuse in tax evasion cases. The exact amount of sales tax you will need to collect will depend on the state you live in, not on the size of the business you operate. If you unsure about your sales tax obligations, contact your local tax authority or a qualified tax professional.

Continue reading at RDTC.com…

New RDTC Corporate Office

I recently moved my Roni Deutch Tax Center corporate offices to a new location, and my incredible team took the time to put some pictures up on my Flickr.com account. Check out a couple of the pictures below, or find the full set here.

Tax Deduction of the Week: Casualty Losses

The Roni Deutch Tax Center – Tax Help Blog posted another great tax deduction of the week, this time taking on casualty and theft losses as well as how to calculate the deduction you may qualify for if you suffer a significant loss. I have included a section of the article below or head on over to the Tax Help Blog for more great tax advice.

Casualty Losses

If you suffer the loss of property (including damage and/or destruction) because of a sudden event, then you may qualify for a casualty loss deduction. These events need to be unexpected, such as an earthquake, fire, flood, shipwreck, storm, tornado, vandalism, etc. However, there are a few situations that are not tax-deductible including accidental breaking, pet-related accidents, accidents resulting from willful neglect, or progressive deterioration.

Theft Losses

Losses of property due to theft may also be tax deductible. As the IRS explains, “a theft is the taking and removing of money or property with the intent to deprive the owner of it. The taking of property must be illegal under the law of the state where it occurred and it must have been done with criminal intent.” Therefore if you are the victim of a burglary, embezzlement, extortion, ransom, robbery, etc. then you may be able to claim a theft loss deduction.

Calculating the Deduction

According to IRS regulations your casualty losses are deductible to the extent that they exceed $100 per event, and the extent that they exceed 10% of your adjusted gross income (AGI). Therefore, if you suffer an $8,000 loss due to a flood, and your AGI is $40,000 then your total deduction will be $3,900 ($8,000 - $100 – {$40,000 x 10%}).

Common Questions About Estimated Quarterly Tax Payments

The June 15^th deadline for making estimated payments to the IRS is only a few days away. To help confused taxpayers, the RDTC Tax Help Blog has posted an entry with answers to the 10 most common questions about quarterly tax payments. I have included a few of questions and answers below, but you can find the full list at RDTC.com.

What federal taxes am I required to include in my quarterly payment?

In your estimated quarterly payment you must pay your federal income tax, as well as Social Security and Medicare taxes, which are known collectively as the self-employment tax. The amount of tax you are required to pay will depend on your income level.

When are my quarterly tax payments due?

The federal due dates for estimated tax payments are April 15, June 15, September 15, and January 15. However, if one of these dates falls on a weekend or legal holiday then the associated payment will be due the following business day.

What forms do I need to use to file my payment?

To file your quarterly payment you will need to complete IRS Form 1040-ES. If you cannot download it online, then you can get a copy at a local IRS office or by calling 800-TAX-FORM.

My business is setup as a partnership; will I still need to make estimated tax payments?

Yes, you and your partner will both need to make quarterly payments unless you are paying yourself wages and are having the necessary taxes withheld from your paychecks.

What is the American Opportunity Education Credit?

Earlier this week the RDTC Tax Help Blog posted a great new article explaining the American Opportunity Education Credit (AOEC), which was introduced through President Obama's American Recovery and Reinvestment Act. Check out the article below.

Expansion of the Hope Credit

Although the name is new, the American Opportunity credit is actually just an expansion of the highly popular “Hope Scholarship” credit. The former credit could only be claimed for two years (up to $1,800) to pay for tuition and other school related expenses. However, the expanded AOEC can be claimed for up to four years, or up to $2,500.

Credit Amounts

The most each student can claim is $2,500. Taxpayers can claim 100 percent of the first $2,000 in qualified educational expenses, and then 25 percent of the next $2,000 for a total of $2,500.

Allowed Expenses

The most common qualifying expenses are tuition fees and related expenses. Students can also claim other expenses depending on their individual studies. For example you could include the cost of a computer in your credit amount only if it was a requirement for a class. Likewise, you could claim the costs of a textbook if it was required reading by one of your professors. If you are unsure about a specific expense then you should speak with a qualified tax professional who can examine your unique financial situation.

Continued reading at RDTC.com…

The Standard Deduction

Last week the RDTC Tax Help Blog posted a new entry in its Deduction of the Week series. The new article explains the standard deduction, and how to determine if you should itemize or not. I have included a section of the Deduction of the Week entry below, but you can find the full text at the RDTC Tax Help Blog.

To Itemize or Not?

If you itemize deductions on your tax return, you will be eligible to claim dozens of tax deductions, such as the mortgage interest deduction or vehicle registration fee deduction. However, if you do not qualify for many deductions, you can claim the standard deduction, which will reduce your adjusted gross income by a flat amount.

To decide if you should itemize or not, you should first determine all the deductions you qualify for and the total amounts of those deductions. If that number is higher than the standard deduction you would qualify for then you should itemize. If the number is lower, then you should claim the standard deduction.

Standard Deduction Amounts

Listed below are the standard deduction amounts for 2010:

• Single $5,700
• Married Filing Jointly $11,400
• Married Filing Separately $5,700
• Head of Household $8,400

The Tax Advantages of Going Green in 2010

Last week the RDTC Tax Help Blog posted a new entry explaining the tax advantages of going “green” in 2010. As you can see from the text below, there are plenty of credits and tax breaks for both individuals and businesses that make energy efficient purchases. You can find a snippet of the original entry below, or checkout the full text at RDTC.com.

Driving Green

Unfortunately many taxpayers are under the impression that all of the tax incentives for buying a hybrid vehicle have expired. However, this is not true. There are plenty of popular vehicles that qualify for the tax credit. A few 2010 Ford Hybrids qualify for a couple of credits, including the Fusion, which can qualify for a credit of up to $3,400. Additionally, electric vehicles such as the Chevy Volt offer the best credits. If you decide to buy an electric vehicle in 2010 then you can claim a credit of up to $7,500.

Conscious Commuting

If you live close enough to your work to be able to ride your bicycle back and forth every day, then you might be eligible for tax-free reimbursement from your employer (if they participate in the program). New legislation allows employers to give employees up to $20 a month for riding a bike to work. Additionally, employers can reimburse up to $230 per month of an employee’s public transportation expenses. Be sure to talk to your employer or human resource department to see if they offer conscious commuting reimbursements.

Solar Savings

Homeowners and businesses have been able to take tax credits for installing solar panels for a while now, but many taxpayers are resistant due to the high expense. However, the prices of solar upgrades have gone down drastically over the past few years. Additionally, even less expensive solar products – such as solar powered water heathers – will qualify for a tax credit of up to 30% of the purchase price. This credit can even be claimed against the AMT.

Continue reading at RDTC.com…

Tax Incentives to Adopt a Child

Most Americans know about the tax benefits of having children, but you might be surprised to learn that there are actually decent tax incentives to adopt children. The RDTC Tax Help Blog posted a blog entry last week explaining the tax laws surrounding adoption. You can find a segment of the article below or find the full text at the RDTC Tax Help Blog.

The Basics

There are two main tax incentives for families that adopt, an exclusion and a credit. Taxpayers can take advantage of the credit and exclusion for the expenses of adopting an eligible child. Meaning, you may be able to exclude up to $12,170 (or whatever the limit is for the tax year) from your income, and claim a credit for the same amount. However, you cannot claim both the credit and exclusion for the same expenses.

Credit Amounts

The value of the credit for the past few years is listed below. It is important to note that the credit was expanded in 2001 as part of the Economic Growth and Tax Relief Reconciliation Act of 2001, which is due to expire at the end of 2010. Unless Congress extends the package the value of the credit will be reduced by at least 50%.

2011: $6,000 or less

2010: $12,170

2009: $12,150

2008: $11,650

2007: $11,390

2006: $10,960

Income Phase Outs

As with most federal tax credits and deductions, the value of the adoption credit phases out when your income reaches a certain level. The phase out ranges are listed below for the past few tax years. The IRS also provides a worksheet for figuring out your credit value in the Instructions for Form 8839.

2010: $182,520 - $222,520

2009: $182,180 - $222,180

2008: $174,730 - $214,730

2007: $170,820 - $210,820

2006: $164,410 - $204,410

Taxpayers: Beware of Anticipation Refund Loans

The other day Charles Prescott, a tax preparer at the Roni Deutch Tax Center in Myrtle Beach, was interviewed by Carolina Live on the difference between refund anticipation loans and refund transfers, which are much better for consumers. Check out the article with the quote from Prescott below.

In this economy, some look for quick and easy cash advances on your tax filings, but consumer advocates say beware.

One of the ways to get in the most trouble is through something called a Refund Anticipation Loan -- or an RAL.

RALs are short-term loans based on the taxpayers expected refund, but it comes with a cost, and in some cases that means astronomical interest rates.

Some major tax preparers offer RALS, but at the Roni Deutch Tax Center in Myrtle Beach, the preparers say stay away.

"As a financial product, they're creating a loan that has absolutely no risk that charges an obscene interest rate. You should avoid these whenever possible," said Charles Prescott, a tax preparer.

But many Americans don't especially the working poor who are enticed by the quick and easy cash and who may not think about the fine print.

"While there are disclosures there, most people just don't read them. Kind of like the 30 pages or mortgage paperwork that no one read a few years ago."

For tax preparers and financial institutions who deal in RALs, they're a high-profit, low-risk loan. For consumers, the fees and interest rates add up quickly.

Continue reading at Carolina Live.com…

Taxes and Identity Theft

Last week, the RDTC Tax Help Blog posted a new article on tax related identity theft. You can find a section of the article below, or click here to view the full text.

Now that tax season is here, people across the country are worrying about getting their tax return prepared and filed with the IRS. However, there is another issue that taxpayers have to worry about: tax-related identity theft. Fortunately, you can prevent becoming an identity theft victim by following a few instructions. The good news is, even if your identity is stolen the IRS will work with you to resolve the matter as quickly as possible.

Increased Risk

A few years ago, Nina Olson, the National Taxpayer Advocate made the startling revelation that between 2004 and 2007, the number of tax-related identity theft problems rose by 644%.

Erroneous Returns or Stolen Refunds

If you get a notice from the IRS indicating that more than one return was filled using your social security number (SSN), you will want to contact them immediately to find out if you are a victim of identity theft. Using erroneous returns, thieves can obtain refunds from the IRS in your name, a common tactic used by tax scammers. The IRS will work with you to resolve the problem, but it is important to contact them as soon as possible.

Continued at RDTC.com…

10 Reasons to File your Tax Return Early

Tax season is here again, and the RDTC Tax Help Blog has posted a great article discussing reasons why you should file your tax return early, the best of which is simply the stress relief of knowing you’re finished. You can find a few of the tips below, but be sure to read the full list at 10 Reasons to File your Tax Return Early.

1. Less Chance of Late Fees

If you file your return nice and early, the chance of having to pay a late fee is pretty much nonexistent. Just make sure all necessary documents and payments are included with your return to ensure there will be no return service required.

2. Avoid the Crowds

The last two weeks before April 15th tax preparation companies, accountants, and tax professionals become extremely busy. If you want to avoid waiting hours inside a crowded office then you should get your returns filed before busy season begins.

3. Time for Credit, Deduction Research

When you choose to prepare your return last minute, it can be too easy to miss a tax deduction or credit that could put extra money in your pocket. Starting early gives you enough time to relax and spend enough time on your return to find all available deductions and credits.

Roni Deutch Tax Center Ready to Help Local Volunteers

Last week a Roni Deutch Tax Center franchisee was featured in a NorthJersey.com news story because of their fundraising effort for their local fire department. I am proud to see the charitable nature of this storeowner, and the enthusiasm their office has for their local community. Checkout the following article from NorthJersey.com.

The Roni Deutch Tax Center located at 24-11 Fair Lawn Ave. in Fair Lawn, will be conducting a fundraiser for the Fair Lawn Fire Department and First Aid Squad. This tax season, from now until April 15, the Tax Center will donate $20 to the fire department and first aid squad for every tax return completed.

"We appreciate everything we can get and it's very nice of them to do something to support our efforts," said Jay Bender, a 39-year fire department volunteer of Company 4.

"The community should be aware and support our fire department and first aid squad," said Roni Deutch Tax Center Manager Lisa Hartensveld.

Last year, the tax center partnered with the first aid squad and raised just over $200. This will be Roni Deutch's second tax season in Fair Lawn, and the company hopes to raise even more money this year.

"The money does add up very fast and this is our way of giving back to the community" said Harensveld.

Every customer who wishes to participate in the fundraiser must mention the fire department or rescue squad when they come in to have their taxes completed. The customer will not be charged the $20 for the donation; it will be donated by the tax center.

For more on the fundraiser, call the Roni Deutch Tax Center at 201-663-9055.

10 Ways to Reduce your Tax Liability in Under 10 Minutes

Last week the RDTC Tax Help Blog posted a helpful article for anyone looking to lower their taxable income before the end of the year. In addition to the standard end of the year tax tips, the blog even provides links to charities that accept donations online, and banks that will allow you to setup college saving funds online. I have included a few tips below, but be sure to check out the full article here.

Electronic Mortgage Payments

If you can make your mortgage payment online, then you might want to make an extra mortgage payment before the end of the year. Since the IRS allows you to deduct all mortgage interest, this could significantly lower your taxable income for the year. However, if you make the payment close to the end of the year then you will want to be sure and double check the 1098 Form you receive from your lender to ensure it includes the last minute payment.

Make State and Local Tax Payments

The IRS allows you to deduct all taxes paid to state and local governments. If you know that you are going to owe, then you might want to consider making an estimated payment before the end of the year. Check out your local tax agency’s website to see if they accept payments online, or they might have a phone number that you can call to make a payment with your credit card.

Order Energy Efficient Home Upgrades

The IRS offers a credit of 30% of the cost of qualified energy efficient home upgrades, up to $1,500. Although the credit applies to upgrades such as roofs and insulation, certain water heaters, windows, doors, and air conditioning units qualify as well. If you are in need of any of the aforementioned products then you could make your purchase from Lowes.com or HomeDepot.com in a matter of minutes. However, before you pull out your credit card be sure to check out this page on EnergyStar.gov explaining the Federal tax credit.

Splurge on Office Supplies and Furniture

If you are a small business owner and have an office or store for your business, then you can greatly reduce your taxable income within a few minutes by splurging on new office supplies and furniture. There are lots of great office furniture websites, and some that will even deliver and setup the furniture for you. In just a few minutes, you could easily reduce your tax liability by thousands of dollars.

Continued at RDTC.com…

Year Round Tax Planning Tips

Last week the Roni Deutch Tax Center – Tax Help Blog posted a new article discussing some year round tax planning tips. As the blog entry explains, even if you are a regular wage-earning employee and do not have to worry about making quarterly payments, you should still get in the habit of thinking about your taxes all year long. It will make tax season less stressful, and by planning your finances in advance you can keep your tax liability as low as possible. Below is a snippet of the article with some fall tax tips, but be sure to check out the full entry at RDTC.com.

Fall (September – November)

When your children go back to school and the leaves start falling from the trees, you need to start thinking about taxes. The year is coming to an end, and if you have a steady job then you should have a pretty good idea about what your total income is going to be for the year. Once you calculate your yearly income, you will know what tax bracket you fall in, and can make any necessary adjustments to your withholdings. If you have not paid enough, you can have your employer take out additional taxes from your paycheck. It will mean less money each month, but it sure beats having to pay the IRS a large payment in April. On the other hand, if you have overpaid your taxes then you can lower your withholdings and get a little extra holiday season cash.

The fall months are also your last chance to make any longer-term tax moves that cannot be made last minute come December. For example, if you plan to make a large charitable donation, then you will want to make it now so that you can make sure you get proper receipts and documentation. Finally, if you are trying to buy a house and take advantage of the $8,000 Federal tax credit then you are going to want to make sure you close escrow during the fall months. The credit expires on December 1st, and is unlikely to get extended into next year.

Don’t Try to Throw This Lady Tax Attorney out At Third!

Yesterday, I made an appearance on the Wall Street Journal’s Franchise Show in a segment titled, “Don’t Try to Throw This Lady Tax Attorney out At Third!” I discussed building my franchise and what life events helped make me the business leader I am today.

I’ve included an embedded video below that features the audio of the interview. You can stream it or click here to download an Mp3.

The Tax Consequences of Common Business Entities

Last week the RDTC Tax Help Blog posted an informative entry on the tax consequences of the 5 most common business entities in the US. Check out the text of the article below.

1. Sole Proprietors

With a sole proprietorship, there is no distinction between the person who owns the business and the business itself. Because of this, the sole proprietor is liable for any legal disputes against the business, as well as all tax liabilities. Specifically, the business owner is liable for income and self-employment taxes on all business profits. There are numerous disadvantages of sole proprietorships but one advantage is that an owner can hire their children and not have to pay payroll taxes. Sole proprietors also have the advantage of not being charged a penalty should they dissolve the business.

2. General Partnership

A general partnership is pretty similar to a sole proprietorship, however the liability is spread between multiple taxpayers, instead of just one person. While both sole proprietorships and general partnership give you more tax flexibility, it comes at the expense of also being more liable both legally and financially.

3. Limited Liability Companies (LLCs)

A great advantage of an LLC is the benefit of no double taxation. You also receive more flexible tax options. An LLC owner can choose between having the business taxed separately as its own entity, or decide to have the taxes pass down like with a partnership or sole proprietorship. This flexibility and added insurance has made LLCs a good option for many business owners in this country.

4. Corporation

If you choose to incorporate your business, the corporation will be taxed at it's own corporate tax rate. While sole proprietors see flow-through income, C-corporations, encounter “double taxation.” Meaning the corporation is taxed for the income it earns, then, the individual shareholder is also taxed on their income. However, C-corporations do get to enjoy a wide range of tax deductions for business losses and fringe benefits.

5. S-Corporation

In addition to C-corporations, the IRS also recognizes what is known as an S-Corporation. You can make the change simply by filing Form 2553 with the IRS. As opposed to C-corporations, an S-corporation is not taxed separately, but more like a partnership or sole proprietorship would be. Therefore the biggest benefit is that S-corporation owners can avoid being double taxed on their income.

Other Considerations: State Taxes

There may be specific state liabilities for some business entities, depending on where you live. These taxes can often sway you one way or the other if you are having trouble deciding. Always make sure to check out your state tax board for information on business taxes before you make any decisions.

Two W-2’s, and a Partial Payment in a Money Tree…

Today is the second day of taxes, and the featured article at 12DaysOfTaxes.com is titled, “9 Ways to Cut Down on Paper Usage this Tax Season.” Below is a summary of the article, but be sure to check out 12DaysOfTaxes.com for the full version along with details on how you can win $500 in gift cards!

1) Keep all important documents and tax forms in a designated file, drawer, or even box.

2) E-file your state and federal income returns.

3) E-file quarterly tax payments.

4) Save copies of online purchases on CD-R and thumb drives instead of printing them out.

5) Use software or electronic payments for payroll taxes.

6) Use a virtual fax instead of a fax machine that prints out on paper.

7) If you intend to buy a new car, consider making the purchase online.

8) Paper has two-sides: use both!

9) Print preview before every print.

Now Open: RDTC Tax Help Blog

I am proud to announce that the official Roni Deutch Tax Center website, RDTC.com, added a new blog to its content. The new blog, the RDTC Tax Help Blog, is full of useful information for any one who needs help with modern tax issues. The blog features categories you would expect to find in a tax resource center (frequently asked questions, glossary terms, articles, etc) but in an exciting new blog format. So be sure to head on over to RDTC.com to check out the new blog!