Some children receive investment income and are required to file a federal tax return. If a child cannot file his or her own tax return for any reason, such as age, the child’s parent or guardian is responsible for filing a return on the child’s behalf.
There are special tax rules that affect how parents report a child’s investment income. Some parents can include their child’s investment income on their tax return. Other children may have to file their own tax return.
Investment income normally includes interest, dividends, capital gains and other unearned income, such as from a trust.
Special rules apply if your child’s total investment income is more than $1,900. The parent’s tax rate may apply to part of that income instead of the child’s tax rate.
If your child’s total interest and dividend income is less than $9,500, you may be able to include the income on your tax return. See Form 8814, Parents’ Election to Report Child’s Interest and Dividends. If you make this choice, the child does not file a return.
Your child must file their own tax return if they received investment income of $9,500 or more. File Form 8615, Tax for Certain Children Who Have Investment Income of More Than $1,900, with the child’s federal tax return.
Free Consultation (713)300-3965 or contact us via webwww.advancetaxrelief.net. We assist taxpayers nationwide!
ADVANCE TAX RELIEF LLC (ATR) - "WE SOLVE TAX PROBLEMS"
8449 W. Bellfort, Suite 356.
Houston, TX 77071
www.advancetaxrelief.net
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BBB Accredited Business
Monday, April 22, 2013
Tuesday, April 16, 2013
TAX TIPS FOR THE SELF-EMPLOYED www.advancetaxrelief.net
When you are self-employed, it typically means you work for yourself, as an independent contractor, or own your own business. I’m going to discuss a few key points about what you should know about self-employment and self-employment taxes:
Self-employment income can include pay that you receive for part-time work you do out of your home. This could include income you earn in addition to your regular job.
Self-employed individuals file a Schedule C, Profit or Loss from Business, or Schedule C-EZ, Net Profit from Business, with their Form 1040.
If you are self-employed, you generally have to pay self-employment tax as well as income tax. Self-employment tax includes Social Security and Medicare taxes. You figure this tax using Schedule SE, Self-Employment Tax.
If you are self-employed you may have to make estimated tax payments. People typically make estimated tax payments to pay taxes on income that is not subject to withholding. If you do not make estimated tax payments, you may have to pay a penalty when you file your income tax return. The underpayment of estimated tax penalty applies if you do not pay enough taxes during the year.
When you file your tax return, you can deduct some business expenses for the costs you paid to run your trade or business. You can deduct most business expenses in full, but some costs must be ’capitalized.’ This means you can deduct a portion of the expense each year over a period of years.
You may deduct only the costs that are both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your trade or business.
I hope you find this video clip helpful, please check out our other videos for answers to your various questions.
This article contains general information for taxpayers and should not be relied upon as the only source of authority. Taxpayers should seek professional tax advice for more information or contact Advance Tax Relief LLC
Noah Daniels, EA is the President of Advance Tax Relief LLC based in Houston, TX. Noah is very experienced in representing taxpayers before the examinations, collections and appeals divisions of the IRS and various state taxing authorities. Noah has helped hundreds of taxpayers nationwide resolve their tax problems with the IRS saving taxpayers hundreds of thousands of dollars in back-taxes, penalties and interest and the number keeps rising. He also speaks at various local organizations educating the public on how to handle their IRS tax problems, small business credits and tax compliance issues. For speaking engagements or for tax related questions email noah.daniels@advancetaxrelief.com.
HOUSTON, TX 77071
Phone: (713)300-3965, (800)790-8574
www.advancetaxrelief.net
Follow us on twitter: https://twitter.com/IRSTAXPRO
Advance Tax Relief on BBB: http://www.bbb.org/houston/business-reviews/taxes-consultants-and-representatives/advance-tax-relief-llc-in-houston-tx-90024857
Links
www.irs.gov
www.advancetaxrelief.com
www.advancetaxrelief.net
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Keywords:
back taxes help, federal tax lien help, file back taxes, handle auditor, handle auditors, help with IRS, IRS audit help, IRS bankrupcy, IRS bankruptcy, IRS letters, IRS levys, IRS liens, IRS tax consultants, lawyer to help with tax problems, letter from the IRS, www.advancetaxrelief.net, irs.gov, taxmasters, txmstr.com, jk harris, ronnie deuth, patrick cox, barack obama, george bush, politics, democratic party, republican party, tax reform, advancetaxrelief.com, tax attorney, tax attorney Houston.
Self-employment income can include pay that you receive for part-time work you do out of your home. This could include income you earn in addition to your regular job.
Self-employed individuals file a Schedule C, Profit or Loss from Business, or Schedule C-EZ, Net Profit from Business, with their Form 1040.
If you are self-employed, you generally have to pay self-employment tax as well as income tax. Self-employment tax includes Social Security and Medicare taxes. You figure this tax using Schedule SE, Self-Employment Tax.
If you are self-employed you may have to make estimated tax payments. People typically make estimated tax payments to pay taxes on income that is not subject to withholding. If you do not make estimated tax payments, you may have to pay a penalty when you file your income tax return. The underpayment of estimated tax penalty applies if you do not pay enough taxes during the year.
When you file your tax return, you can deduct some business expenses for the costs you paid to run your trade or business. You can deduct most business expenses in full, but some costs must be ’capitalized.’ This means you can deduct a portion of the expense each year over a period of years.
You may deduct only the costs that are both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your trade or business.
I hope you find this video clip helpful, please check out our other videos for answers to your various questions.
This article contains general information for taxpayers and should not be relied upon as the only source of authority. Taxpayers should seek professional tax advice for more information or contact Advance Tax Relief LLC
Noah Daniels, EA is the President of Advance Tax Relief LLC based in Houston, TX. Noah is very experienced in representing taxpayers before the examinations, collections and appeals divisions of the IRS and various state taxing authorities. Noah has helped hundreds of taxpayers nationwide resolve their tax problems with the IRS saving taxpayers hundreds of thousands of dollars in back-taxes, penalties and interest and the number keeps rising. He also speaks at various local organizations educating the public on how to handle their IRS tax problems, small business credits and tax compliance issues. For speaking engagements or for tax related questions email noah.daniels@advancetaxrelief.com.
ADVANCE TAX RELIEF
LLC - "WE SOLVE YOUR TAX PROBLEMS"
8449 W. BELLFORT, SUITE 356HOUSTON, TX 77071
Phone: (713)300-3965, (800)790-8574
www.advancetaxrelief.net
BBB Accredited Business
Like our facebook page to receive
free tax planning tips:
http://www.facebook.com/pages/ADVANCE-TAX-RELIEF-LLC/159880007482847?ref=stream
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Links
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Keywords:
back taxes help, federal tax lien help, file back taxes, handle auditor, handle auditors, help with IRS, IRS audit help, IRS bankrupcy, IRS bankruptcy, IRS letters, IRS levys, IRS liens, IRS tax consultants, lawyer to help with tax problems, letter from the IRS, www.advancetaxrelief.net, irs.gov, taxmasters, txmstr.com, jk harris, ronnie deuth, patrick cox, barack obama, george bush, politics, democratic party, republican party, tax reform, advancetaxrelief.com, tax attorney, tax attorney Houston.
HOME ENERGY-EFFICIENT CREDIT www.advancetaxrelief.net
If you made your home more energy efficient last year, you may qualify for a tax credit on your 2012 federal income tax return. Here is some basic information about home energy credits that you should know.
Residential Energy Efficient Property Credit
Non-Business Energy Property Credit
Non-Business Energy Property Credit You may claim a credit of 10 percent of the cost of certain energy saving property that you added to your main home. This includes the cost of qualified insulation, windows, doors and roofs.
In some cases, you may be able to claim the actual cost of certain qualified energy-efficient property. Each type of property has a different dollar limit. Examples include the cost of qualified water heaters and qualified heating and air conditioning systems. The Non Business Energy property Credit has a maximum lifetime limit of $500 and you may only use $200 of this limit for windows.
Your main home must be located in the U.S. to qualify for the Non-Business Energy Property Credit. Not all energy-efficient improvements qualify, so be sure you have the manufacturer’s credit certification statement. It is usually available on the manufacturer’s website or with the product’s packaging. The credit was to expire at the end of 2011 but a recent law extended it for two years through the end of 2013. I don’t know as of now if this credit would be extended any further.
Residential Energy Efficient Property CreditThis tax credit is 30 percent of the cost of alternative energy equipment that you installed on or in your home. Qualified equipment includes solar hot water heaters, solar electric equipment and wind turbines.
There is no limit on the amount of credit available for most types of property. If your credit is more than the tax you owe, you can carry forward the unused portion of this credit to next year’s tax return.
You must install qualifying equipment in connection with your home located in the United States. It does not have to be your main home and this credit is available through 2016.
Please use Form 5695, Residential Energy Credits, to claim these credits. You can get Form 5695 at IRS.gov.
This article contains general information for taxpayers and should not be relied upon as the only source of authority. Taxpayers should seek professional tax advice for more information or contact Advance Tax Relief LLC
Noah Daniels, EA is the President of Advance Tax Relief LLC based in Houston, TX. Noah is very experienced in representing taxpayers before the examinations, collections and appeals divisions of the IRS and various state taxing authorities. Noah has helped hundreds of taxpayers nationwide resolve their tax problems with the IRS saving taxpayers hundreds of thousands of dollars in back-taxes, penalties and interest and the number keeps rising. He also speaks at various local organizations educating the public on how to handle their IRS tax problems, small business credits and tax compliance issues. For speaking engagements or for tax related questions email noah.daniels@advancetaxrelief.com.
8449 W. BELLFORT, SUITE 356
HOUSTON, TX 77071
Phone: (713)300-3965, (800)790-8574
www.advancetaxrelief.net
BBB Accredited Business
Follow us on twitter: https://twitter.com/IRSTAXPRO
Advance Tax Relief on BBB: http://www.bbb.org/houston/business-reviews/taxes-consultants-and-representatives/advance-tax-relief-llc-in-houston-tx-90024857
Links
www.irs.gov
www.advancetaxrelief.com
www.advancetaxrelief.net
www.google.com
www.forbes.com
Keywords:
back taxes help, federal tax lien help, file back taxes, handle auditor, handle auditors, help with IRS, IRS audit help, IRS bankrupcy, IRS bankruptcy, IRS letters, IRS levys, IRS liens, IRS tax consultants, lawyer to help with tax problems, letter from the IRS, www.advancetaxrelief.net, irs.gov, taxmasters, txmstr.com, jk harris, ronnie deuth, patrick cox, barack obama, george bush, politics, democratic party, republican party, tax reform, advancetaxrelief.com, tax attorney, tax attorney Houston.
Residential Energy Efficient Property Credit
Non-Business Energy Property Credit
Non-Business Energy Property Credit You may claim a credit of 10 percent of the cost of certain energy saving property that you added to your main home. This includes the cost of qualified insulation, windows, doors and roofs.
In some cases, you may be able to claim the actual cost of certain qualified energy-efficient property. Each type of property has a different dollar limit. Examples include the cost of qualified water heaters and qualified heating and air conditioning systems. The Non Business Energy property Credit has a maximum lifetime limit of $500 and you may only use $200 of this limit for windows.
Your main home must be located in the U.S. to qualify for the Non-Business Energy Property Credit. Not all energy-efficient improvements qualify, so be sure you have the manufacturer’s credit certification statement. It is usually available on the manufacturer’s website or with the product’s packaging. The credit was to expire at the end of 2011 but a recent law extended it for two years through the end of 2013. I don’t know as of now if this credit would be extended any further.
Residential Energy Efficient Property CreditThis tax credit is 30 percent of the cost of alternative energy equipment that you installed on or in your home. Qualified equipment includes solar hot water heaters, solar electric equipment and wind turbines.
There is no limit on the amount of credit available for most types of property. If your credit is more than the tax you owe, you can carry forward the unused portion of this credit to next year’s tax return.
You must install qualifying equipment in connection with your home located in the United States. It does not have to be your main home and this credit is available through 2016.
Please use Form 5695, Residential Energy Credits, to claim these credits. You can get Form 5695 at IRS.gov.
This article contains general information for taxpayers and should not be relied upon as the only source of authority. Taxpayers should seek professional tax advice for more information or contact Advance Tax Relief LLC
Noah Daniels, EA is the President of Advance Tax Relief LLC based in Houston, TX. Noah is very experienced in representing taxpayers before the examinations, collections and appeals divisions of the IRS and various state taxing authorities. Noah has helped hundreds of taxpayers nationwide resolve their tax problems with the IRS saving taxpayers hundreds of thousands of dollars in back-taxes, penalties and interest and the number keeps rising. He also speaks at various local organizations educating the public on how to handle their IRS tax problems, small business credits and tax compliance issues. For speaking engagements or for tax related questions email noah.daniels@advancetaxrelief.com.
ADVANCE TAX RELIEF
LLC - "WE SOLVE YOUR TAX PROBLEMS"
8449 W. BELLFORT, SUITE 356
HOUSTON, TX 77071
Phone: (713)300-3965, (800)790-8574
www.advancetaxrelief.net
BBB Accredited Business
Like our facebook page to receive
free tax planning tips:
http://www.facebook.com/pages/ADVANCE-TAX-RELIEF-LLC/159880007482847?ref=stream
Follow us on twitter: https://twitter.com/IRSTAXPRO
Advance Tax Relief on BBB: http://www.bbb.org/houston/business-reviews/taxes-consultants-and-representatives/advance-tax-relief-llc-in-houston-tx-90024857
Links
www.irs.gov
www.advancetaxrelief.com
www.advancetaxrelief.net
www.google.com
www.forbes.com
Keywords:
back taxes help, federal tax lien help, file back taxes, handle auditor, handle auditors, help with IRS, IRS audit help, IRS bankrupcy, IRS bankruptcy, IRS letters, IRS levys, IRS liens, IRS tax consultants, lawyer to help with tax problems, letter from the IRS, www.advancetaxrelief.net, irs.gov, taxmasters, txmstr.com, jk harris, ronnie deuth, patrick cox, barack obama, george bush, politics, democratic party, republican party, tax reform, advancetaxrelief.com, tax attorney, tax attorney Houston.
TIPS ON DEDUCTING CHARITABLE CONTRIBUTIONS www.advancetaxrelief.net
Giving to charity is good and helps to lower your tax bill. Here are a few tips to help ensure your contributions pay off on your tax return.
If you want a tax deduction, you must donate to a qualified charitable organization. You cannot deduct contributions you make to either an individual, a political organization or a political candidate
You must file Form 1040 and itemize your deductions on Schedule A. If your total deduction for all noncash contributions for the year is more than $500, you must also file Form 8283, Noncash Charitable Contributions, with your tax return.
If you receive a benefit of some kind in return for your contribution, you can only deduct the amount that exceeds the fair market value of the benefit you received. Examples of benefits you may receive in return for your contribution include merchandise, tickets to an event or other goods and services.
Donations of stock or other non-cash property are usually valued at fair market value. Used clothing and household items generally must be in good condition to be deductible. Special rules apply to vehicle donations. Fair market value is generally the price at which someone can sell the property.
You must have a written record about your donation in order to deduct any cash gift, regardless of the amount. Cash contributions include those made by check or other monetary methods. That written record can be a written statement from the organization, a bank record or a payroll deduction record that substantiates your donation. That documentation should include the name of the organization, the date and amount of the contribution. A telephone bill meets this requirement for text donations if it shows this same information.
To claim a deduction for gifts of cash or property worth $250 or more, you must have a written statement from the qualified organization. The statement must show the amount of the cash or a description of any property given. It must also state whether the organization provided any goods or services in exchange for the gift. You may use the same document to meet the requirement for a written statement for cash gifts and the requirement for a written acknowledgement for contributions of $250 or more.
If you donate one item or a group of similar items that are valued at more than $5,000, you must also complete Section B of Form 8283. This section generally requires an appraisal by a qualified appraiser.
For more information on charitable contributions, see IRS Publication 526, Charitable Contributions. For information about noncash contributions, see Publication 561, Determining the Value of Donated Property.
This article contains general information for taxpayers and should not be relied upon as the only source of authority. Taxpayers should seek professional tax advice for more information or contact Advance Tax Relief LLC
Noah Daniels, EA is the President of Advance Tax Relief LLC based in Houston, TX. Noah is very experienced in representing taxpayers before the examinations, collections and appeals divisions of the IRS and various state taxing authorities. Noah has helped hundreds of taxpayers nationwide resolve their tax problems with the IRS saving taxpayers hundreds of thousands of dollars in back-taxes, penalties and interest and the number keeps rising. He also speaks at various local organizations educating the public on how to handle their IRS tax problems, small business credits and tax compliance issues. For speaking engagements or for tax related questions email noah.daniels@advancetaxrelief.com.
HOUSTON, TX 77071
Phone: (713)300-3965, (800)790-8574
www.advancetaxrelief.net
BBB Accredited Business
Follow ATR on twitter: https://twitter.com/IRSTAXPRO
Advance Tax Relief on BBB: http://www.bbb.org/houston/business-reviews/taxes-consultants-and-representatives/advance-tax-relief-llc-in-houston-tx-90024857
Links
www.irs.gov
www.advancetaxrelief.com
www.advancetaxrelief.net
www.google.com
www.forbes.com
Keywords:
back taxes help, federal tax lien help, file back taxes, handle auditor, handle auditors, help with IRS, IRS audit help, IRS bankrupcy, IRS bankruptcy, IRS letters, IRS levys, IRS liens, IRS tax consultants, lawyer to help with tax problems, letter from the IRS, www.advancetaxrelief.net, irs.gov, taxmasters, txmstr.com, jk harris, ronnie deuth, patrick cox, barack obama, george bush, politics, democratic party, republican party, tax reform, advancetaxrelief.com, tax attorney, tax attorney houston
If you want a tax deduction, you must donate to a qualified charitable organization. You cannot deduct contributions you make to either an individual, a political organization or a political candidate
You must file Form 1040 and itemize your deductions on Schedule A. If your total deduction for all noncash contributions for the year is more than $500, you must also file Form 8283, Noncash Charitable Contributions, with your tax return.
If you receive a benefit of some kind in return for your contribution, you can only deduct the amount that exceeds the fair market value of the benefit you received. Examples of benefits you may receive in return for your contribution include merchandise, tickets to an event or other goods and services.
Donations of stock or other non-cash property are usually valued at fair market value. Used clothing and household items generally must be in good condition to be deductible. Special rules apply to vehicle donations. Fair market value is generally the price at which someone can sell the property.
You must have a written record about your donation in order to deduct any cash gift, regardless of the amount. Cash contributions include those made by check or other monetary methods. That written record can be a written statement from the organization, a bank record or a payroll deduction record that substantiates your donation. That documentation should include the name of the organization, the date and amount of the contribution. A telephone bill meets this requirement for text donations if it shows this same information.
To claim a deduction for gifts of cash or property worth $250 or more, you must have a written statement from the qualified organization. The statement must show the amount of the cash or a description of any property given. It must also state whether the organization provided any goods or services in exchange for the gift. You may use the same document to meet the requirement for a written statement for cash gifts and the requirement for a written acknowledgement for contributions of $250 or more.
If you donate one item or a group of similar items that are valued at more than $5,000, you must also complete Section B of Form 8283. This section generally requires an appraisal by a qualified appraiser.
For more information on charitable contributions, see IRS Publication 526, Charitable Contributions. For information about noncash contributions, see Publication 561, Determining the Value of Donated Property.
This article contains general information for taxpayers and should not be relied upon as the only source of authority. Taxpayers should seek professional tax advice for more information or contact Advance Tax Relief LLC
Noah Daniels, EA is the President of Advance Tax Relief LLC based in Houston, TX. Noah is very experienced in representing taxpayers before the examinations, collections and appeals divisions of the IRS and various state taxing authorities. Noah has helped hundreds of taxpayers nationwide resolve their tax problems with the IRS saving taxpayers hundreds of thousands of dollars in back-taxes, penalties and interest and the number keeps rising. He also speaks at various local organizations educating the public on how to handle their IRS tax problems, small business credits and tax compliance issues. For speaking engagements or for tax related questions email noah.daniels@advancetaxrelief.com.
ADVANCE TAX RELIEF
LLC - "WE SOLVE YOUR TAX PROBLEMS"
8449 W. BELLFORT, SUITE 356HOUSTON, TX 77071
Phone: (713)300-3965, (800)790-8574
www.advancetaxrelief.net
Like our facebook page to receive
free tax tips:
http://www.facebook.com/pages/ADVANCE-TAX-RELIEF-LLC/159880007482847?ref=stream
Follow ATR on twitter: https://twitter.com/IRSTAXPRO
Advance Tax Relief on BBB: http://www.bbb.org/houston/business-reviews/taxes-consultants-and-representatives/advance-tax-relief-llc-in-houston-tx-90024857
Links
www.irs.gov
www.advancetaxrelief.com
www.advancetaxrelief.net
www.google.com
www.forbes.com
Keywords:
back taxes help, federal tax lien help, file back taxes, handle auditor, handle auditors, help with IRS, IRS audit help, IRS bankrupcy, IRS bankruptcy, IRS letters, IRS levys, IRS liens, IRS tax consultants, lawyer to help with tax problems, letter from the IRS, www.advancetaxrelief.net, irs.gov, taxmasters, txmstr.com, jk harris, ronnie deuth, patrick cox, barack obama, george bush, politics, democratic party, republican party, tax reform, advancetaxrelief.com, tax attorney, tax attorney houston
Friday, April 5, 2013
EDUCATION TAX BENEFITS www.advancetaxrelief.net
If
you pay tuition, fees, and other costs for attendance at an eligible
educational institution for yourself, your spouse, or your dependent, you may
be able to take advantage of one or more of the education tax benefits.
• You may claim only one of the following education tax benefits for the same student per year: tuition and fees deduction, American Opportunity Credit, or Lifetime Learning Credit.
• Tuition and fees deduction up to $4,000 from gross income. Income limitations apply.
• Student loan interest deduction up to $2,500 from gross income. Income limitations apply.
• Business deduction on Schedule C or F. You can deduct the cost of education related to the business or farm activity.
• Miscellaneous itemized deduction on Schedule A, subject to the 2% AGI limitation. You can deduct the unreimbursed cost of education required to keep your current job or maintain and improve skills needed for your job. You cannot deduct the cost of education that qualifies you for a new trade or business.
Note: The provision allowing a deduction from gross income for tuition and fees was set to expire after 2011. As of the date of printing, the provision had not yet been extended for the 2012 tax year.
• American Opportunity Credit, $2,500 maximum per student per year.
• Lifetime Learning Credit, $2,000 maximum per tax return per year.
Note: The Hope Credit applied to 2008 and earlier years. It was replaced by the more generous American Opportunity Credit for the 2009 – 2012 tax years. As of the date of printing, the provision for the American Opportunity Credit had not yet been extended beyond 2012.
• The 10% penalty does not apply to traditional IRA or Roth IRA withdrawals, if you use the money to pay qualified education expenses for yourself, spouse, or for any child or grandchild of yourself or your spouse.
• Qualified education expenses include tuition, fees, books, supplies, equipment, and special needs services required for enrollment or attendance at an eligible educational institution. Room and board for students enrolled at least half-time in a degree or certificate program may also qualify.
• Reduce qualified expenses by scholarships and other tax-free assistance the student receives, but not by gifts or inheritances.
Comparison of Education Credits (American Opportunity Credit)
2. 100% of the first $2,000, plus 25% of the next $2,000 of qualifying expenses for each student.
3. 40% of the credit (up to $1,000) may be refundable.
4. Eligible years: • Until the first four years of postsecondary education are completed. Reduced by number of years Hope Credit was claimed for the student.
5. Qualifying expenses: Tuition, required enrollment fees, and course-related books, supplies, and equipment.
6. The student must be pursuing an undergraduate degree or other recognized education credential.
7. Student must be enrolled at least half-time for at least on an academic period beginning during the year.
8. Additional restrictions: The student can have no felony convictions. Taxpayer cannot use MFS status and cannot be claimed as a dependent by another person. Additional conditions apply for nonresident aliens and for taxpayers under age 24.
Lifetime Learning Credit
1. Up to $2,000 per tax return.
2. 20% of the first $10,000 of total qualifying expenses.
3. Nonrefundable tax credit.
4. Eligible years: All years of postsecondary education.
5. The student need not be pursuing a degree or credential.
6. Student must be enrolled in at least one course.
7. Additional restrictions: None.
• Qualified Tuition Programs (QTPs). States sponsor QTPs to allow prepayment of a student’s qualified higher education expenses. For information on a specific QTP, you need to contact the state agency or eligible educational institution that established and maintains it. Note: QTPs are also called 529 Plans because they are authorized under section 529 of the Internal Revenue Code.
• Coverdell Education Savings Accounts (ESAs). A Coverdell ESA can be used to pay a student’s eligible K-12 expenses, as well as higher education expenses. Coverdell ESA contributions are limited to $2,000 total per year for each beneficiary, no matter how many accounts have been established or how many people are contributing. Unless the beneficiary is a person with special needs, contributions to a Coverdell ESA must stop before the beneficiary reaches age 18 and the account balance distributed within 30 days after the beneficiary reaches age 30 (or dies, if earlier).
• You may exclude the part of scholarships, fellowships, and grants that you use for qualifying education expenses while you are a degree candidate.
• You may exclude up to $5,250 paid for you under a qualifying educational assistance plan. Additional amounts are included in your W-2 income, unless they are a working condition fringe benefit. A working condition fringe benefit is an amount that you could have deducted as an employee business expense, had you paid for it instead of your employer.
• If you cash in qualified U.S. Savings Bonds to pay for eligible education expenses for yourself, spouse, or your dependent, you may exclude the bond interest from income
HOUSTON, TX 77071
Phone: (713)300-3965, (800)790-8574
www.advancetaxrelief.net
BBB
Accredited Business
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back taxes help, federal tax lien help, file back taxes, handle auditor, handle auditors, help with IRS, IRS audit help, IRS bankrupcy, IRS bankruptcy, IRS letters, IRS levys, IRS liens, IRS tax consultants, lawyer to help with tax problems, letter from the IRS, www.advancetaxrelief.net, irs.gov, taxmasters, txmstr.com, jk harris, ronnie deuth, patrick cox, barack obama, george bush, politics, democratic party, republican party, tax reform, advancetaxrelief.com, tax attorney, tax attorney houston. irs enrolled agent, CPA.
•
You can claim more than one education benefit in a tax year as long as you do
not use the same expenses for more than one benefit.
•
Exception: Qualified expenses used to claim education benefits can
also be used to eliminate the 10% penalty on premature IRA distributions.• You may claim only one of the following education tax benefits for the same student per year: tuition and fees deduction, American Opportunity Credit, or Lifetime Learning Credit.
Education Deductions.
Deductions
reduce the amount of income subject to income tax. Deductions for education
expenses include:• Tuition and fees deduction up to $4,000 from gross income. Income limitations apply.
• Student loan interest deduction up to $2,500 from gross income. Income limitations apply.
• Business deduction on Schedule C or F. You can deduct the cost of education related to the business or farm activity.
• Miscellaneous itemized deduction on Schedule A, subject to the 2% AGI limitation. You can deduct the unreimbursed cost of education required to keep your current job or maintain and improve skills needed for your job. You cannot deduct the cost of education that qualifies you for a new trade or business.
Note: The provision allowing a deduction from gross income for tuition and fees was set to expire after 2011. As of the date of printing, the provision had not yet been extended for the 2012 tax year.
Education Tax Credits
Tax
credits reduce the amount of income tax you may have to pay. Income limitations
apply. The education credits are claimed on Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits).• American Opportunity Credit, $2,500 maximum per student per year.
• Lifetime Learning Credit, $2,000 maximum per tax return per year.
Note: The Hope Credit applied to 2008 and earlier years. It was replaced by the more generous American Opportunity Credit for the 2009 – 2012 tax years. As of the date of printing, the provision for the American Opportunity Credit had not yet been extended beyond 2012.
Penalty-Free IRA Distributions
If
you withdraw money from your IRA before you are age 59½, you are generally
subject to a penalty of 10% of the distribution, in addition to any tax that
may be due on the distribution.• The 10% penalty does not apply to traditional IRA or Roth IRA withdrawals, if you use the money to pay qualified education expenses for yourself, spouse, or for any child or grandchild of yourself or your spouse.
• Qualified education expenses include tuition, fees, books, supplies, equipment, and special needs services required for enrollment or attendance at an eligible educational institution. Room and board for students enrolled at least half-time in a degree or certificate program may also qualify.
• Reduce qualified expenses by scholarships and other tax-free assistance the student receives, but not by gifts or inheritances.
Comparison of Education Credits (American Opportunity Credit)
American Opportunity Credit
1. Up to $2,500 per eligible student.2. 100% of the first $2,000, plus 25% of the next $2,000 of qualifying expenses for each student.
3. 40% of the credit (up to $1,000) may be refundable.
4. Eligible years: • Until the first four years of postsecondary education are completed. Reduced by number of years Hope Credit was claimed for the student.
5. Qualifying expenses: Tuition, required enrollment fees, and course-related books, supplies, and equipment.
6. The student must be pursuing an undergraduate degree or other recognized education credential.
7. Student must be enrolled at least half-time for at least on an academic period beginning during the year.
8. Additional restrictions: The student can have no felony convictions. Taxpayer cannot use MFS status and cannot be claimed as a dependent by another person. Additional conditions apply for nonresident aliens and for taxpayers under age 24.
1. Up to $2,000 per tax return.
2. 20% of the first $10,000 of total qualifying expenses.
3. Nonrefundable tax credit.
4. Eligible years: All years of postsecondary education.
5. The student need not be pursuing a degree or credential.
6. Student must be enrolled in at least one course.
7. Additional restrictions: None.
Education Savings Plans
Contributions
that you make to education savings plans are not deductible, but the earnings
accumulate tax free. In addition, no tax will be owed on distributions if they are
less than the beneficiary’s qualified education expenses.
Qualified expenses are reduced by scholarships, other tax-free assistance, and
amounts used to figure education credits.• Qualified Tuition Programs (QTPs). States sponsor QTPs to allow prepayment of a student’s qualified higher education expenses. For information on a specific QTP, you need to contact the state agency or eligible educational institution that established and maintains it. Note: QTPs are also called 529 Plans because they are authorized under section 529 of the Internal Revenue Code.
• Coverdell Education Savings Accounts (ESAs). A Coverdell ESA can be used to pay a student’s eligible K-12 expenses, as well as higher education expenses. Coverdell ESA contributions are limited to $2,000 total per year for each beneficiary, no matter how many accounts have been established or how many people are contributing. Unless the beneficiary is a person with special needs, contributions to a Coverdell ESA must stop before the beneficiary reaches age 18 and the account balance distributed within 30 days after the beneficiary reaches age 30 (or dies, if earlier).
Exclusions From Gross Income.
An
exclusion from income means you don’t report the benefit you receive as income
and you don’t pay tax on it, but you also can’t use that same tax-free benefit
for a deduction or credit.• You may exclude the part of scholarships, fellowships, and grants that you use for qualifying education expenses while you are a degree candidate.
• You may exclude up to $5,250 paid for you under a qualifying educational assistance plan. Additional amounts are included in your W-2 income, unless they are a working condition fringe benefit. A working condition fringe benefit is an amount that you could have deducted as an employee business expense, had you paid for it instead of your employer.
• If you cash in qualified U.S. Savings Bonds to pay for eligible education expenses for yourself, spouse, or your dependent, you may exclude the bond interest from income
This
article contains general information for taxpayers and should not be relied
upon as the only source of authority. Taxpayers should seek professional tax
advice for more information or contact Advance Tax Relief LLC
Noah Daniels, EA is the President of
Advance Tax Relief LLC based in Houston, TX. Noah is very experienced in
representing taxpayers before the examinations, collections and appeals
divisions of the IRS and various state taxing authorities. Noah has helped hundreds
of taxpayers nationwide resolve their tax problems with the IRS saving
taxpayers hundreds of thousands of dollars in back-taxes, penalties and interest
and the number keeps rising. He also speaks at various local organizations educating
the public on how to handle their IRS tax problems, small business credits and
tax compliance issues. For speaking
engagements or for tax related questions email noah.daniels@advancetaxrelief.com.
ADVANCE TAX RELIEF LLC - "WE SOLVE YOUR TAX PROBLEMS"
8449 W. BELLFORT, SUITE 356HOUSTON, TX 77071
Phone: (713)300-3965, (800)790-8574
www.advancetaxrelief.net
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DEATH OF A TAXPAYER www.advancetaxrelief.net
When
a taxpayer dies, there are certain returns that still need to be filed, a
responsibility that falls onto the personal representative.
Personal Representative
Under state law, a personal representative is the person appointed by a court to administer an estate. The term includes both executors (appointed when decedent has a will) and administrators (appointed in the absence of a will). A personal representative nominated in a will has no authority over estate assets unless appointed by a court.
Duties of Personal Representative
Duties include collecting all of the decedent’s property, paying any creditors, and distributing assets to beneficiaries. In addition, the representative is responsible for filing various tax returns and seeing that the taxes owed are properly paid.
• A beneficiary receiving non probate assets who undertakes the work. The IRS uses the term “personal representative” to refer to anyone filing for a decedent, whether or not court appointed.
• Form 1040, Final return for year of death (gross income of a decedent from January 1 until the date of death is reported on the decedent’s final income tax return).
• Form 1041, Income tax returns for the probate estate (required if income greater than $600 is received after death by the decedent’s estate).
• Form 706, Estate tax return (required if decedent’s estate exceeds the estate tax exclusion ($5,120,000 in 2012) or if portability election is made.
• Form 709, Gift tax for year of death (required if the decedent gave more than the annual exclusion ($13,000 for 2012) to any one person in the year of death or failed to file any prior year gift tax returns).
• Returns not filed by decedent for prior years—Form 1040, Form 1040X, Form 709. A personal representative may be personally liable for unpaid tax if he or she distributed assets, the estate is insolvent as a result, and the
personal representative had notice of the tax claim.
An executor should obtain an EIN for the probate estate as soon as possible. The identification number must be included on estate returns, statements, and other documents. The executor can obtain an EIN immediately
by phone at 800-829-4933 or online at: www.irs.gov/businesses/small/article/0,,id=102767,00.html.
Note: The processing time for an EIN application by mail is four weeks.
Form 1040, including returns filed by the decedent. Prompt assessment cannot be requested for federal estate tax.
Reporting Income
Before Death After Death
Final Form 1040 Income received by decedent.
Estate Form 1041
• Income in respect of a decedent (IRD) paid to the probate estate.
• Income paid on probate assets during administration.
• Sale of capital assets by the probate estate.
Beneficiary’s Form 1040
• IRD paid directly to the beneficiary.
• Income paid after death on assets received directly from decedent.
• Sale of capital assets received from decedent.
Example: Gene died in 2011. His will
leave all his property to his wife, Kelly. Gene has the following
assets:
• House, bank accounts, and vehicles owned jointly with Kelly.
• Brokerage account in Gene’s name alone.
• Life insurance and 401(k) that name Kelly as beneficiary.
• IRA that names Gene’s son, Emmett, as beneficiary.
• Unpaid wages.
Gene’s only probate assets are
the brokerage account and unpaid wages.
as follows:
• All income received before death is reported on Gene’s final Form 1040.
• After-death earnings on the brokerage account and the wages paid to the estate are reported on Form 1041. If brokerage assets are sold during probate, the sales are reported on the estate’s Form 1041.
• Emmett reports taxable income from the IRA on his Form 1040 in years he receives distributions.
• Kelly reports taxable income on all other assets on her Form 1040 in the year she receives the income
HOUSTON, TX 77071
Phone: (713)300-3965, (800)790-8574
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Personal Representative
Under state law, a personal representative is the person appointed by a court to administer an estate. The term includes both executors (appointed when decedent has a will) and administrators (appointed in the absence of a will). A personal representative nominated in a will has no authority over estate assets unless appointed by a court.
Duties of Personal Representative
Duties include collecting all of the decedent’s property, paying any creditors, and distributing assets to beneficiaries. In addition, the representative is responsible for filing various tax returns and seeing that the taxes owed are properly paid.
No Court-Appointed Representative
When
there is no probate and no appointed representative, the IRS will allow a
“person charged with property of the decedent” to file the decedent’s income
tax returns and claim refunds. IRS written guidance does not specify who this
person should be. If there is a surviving spouse, he or she usually files a
joint final Form 1040 and any other required returns. If there is no surviving
spouse, the person who files is commonly:
•
The trustee of the decedent’s revocable trust,
•
The personal representative nominated in the will who would have been appointed
if probate was required, or• A beneficiary receiving non probate assets who undertakes the work. The IRS uses the term “personal representative” to refer to anyone filing for a decedent, whether or not court appointed.
Decedent’s Tax Returns
The
personal representative is responsible for the following returns when required.• Form 1040, Final return for year of death (gross income of a decedent from January 1 until the date of death is reported on the decedent’s final income tax return).
• Form 1041, Income tax returns for the probate estate (required if income greater than $600 is received after death by the decedent’s estate).
• Form 706, Estate tax return (required if decedent’s estate exceeds the estate tax exclusion ($5,120,000 in 2012) or if portability election is made.
• Form 709, Gift tax for year of death (required if the decedent gave more than the annual exclusion ($13,000 for 2012) to any one person in the year of death or failed to file any prior year gift tax returns).
• Returns not filed by decedent for prior years—Form 1040, Form 1040X, Form 709. A personal representative may be personally liable for unpaid tax if he or she distributed assets, the estate is insolvent as a result, and the
personal representative had notice of the tax claim.
Application for Employer
Identification
Number (EIN)An executor should obtain an EIN for the probate estate as soon as possible. The identification number must be included on estate returns, statements, and other documents. The executor can obtain an EIN immediately
by phone at 800-829-4933 or online at: www.irs.gov/businesses/small/article/0,,id=102767,00.html.
Note: The processing time for an EIN application by mail is four weeks.
Notice of Fiduciary Relationship
The
personal representative must notify the IRS of the fiduciary relationship. Form
56 can be used for this purpose. File separate forms for the decedent and
estate. Form 56 can also be used to notify the IRS of a change in fiduciary or
termination of fiduciary relationship.
Prompt Assessment
Form
4810 can be filed to shorten the statute of limitations for tax returns from
three years to 18 months. File Form 4810 separately after the returns are
filed. Prompt assessment can be requested for Forms 1041 andForm 1040, including returns filed by the decedent. Prompt assessment cannot be requested for federal estate tax.
Discharge From Personal Liability
Personal
representatives can request discharge from personal liability for estate, gift,
and income tax after returns are filed. The personal representative is
discharged from personal liability nine months after receipt of
the request by the IRS, unless notified of unpaid tax.
Fees
All
personal representatives must include in their gross income any fees paid to
them from an estate. Generally, a taxpayer is not in the trade or business of
being an executor and will report these fees on Form 1040, line 21.
Income in the Year of Death
Before Death After Death
Final Form 1040 Income received by decedent.
Estate Form 1041
• Income in respect of a decedent (IRD) paid to the probate estate.
• Income paid on probate assets during administration.
• Sale of capital assets by the probate estate.
Beneficiary’s Form 1040
• IRD paid directly to the beneficiary.
• Income paid after death on assets received directly from decedent.
• Sale of capital assets received from decedent.
Report
income actually or constructively received by the decedent before death on the
final Form 1040. Report income received after death on the return of the
recipient.
•
Probate assets on Form 1041.
•
Nonprobate assets on the tax return of the beneficiary, surviving joint tenant,
or successor who received the asset.assets:
• House, bank accounts, and vehicles owned jointly with Kelly.
• Brokerage account in Gene’s name alone.
• Life insurance and 401(k) that name Kelly as beneficiary.
• IRA that names Gene’s son, Emmett, as beneficiary.
• Unpaid wages.
as follows:
• All income received before death is reported on Gene’s final Form 1040.
• After-death earnings on the brokerage account and the wages paid to the estate are reported on Form 1041. If brokerage assets are sold during probate, the sales are reported on the estate’s Form 1041.
• Emmett reports taxable income from the IRA on his Form 1040 in years he receives distributions.
• Kelly reports taxable income on all other assets on her Form 1040 in the year she receives the income
This
article contains general information for taxpayers and should not be relied
upon as the only source of authority. Taxpayers should seek professional tax
advice for more information or contact Advance Tax Relief LLC
Noah Daniels, EA is the President of Advance Tax Relief LLC based in Houston, TX. Noah is very experienced in representing taxpayers before the examinations, collections and appeals divisions of the IRS and various state taxing authorities. Noah has helped hundreds of taxpayers nationwide resolve their tax problems with the IRS saving taxpayers hundreds of thousands of dollars in back-taxes, penalties and interest and the number keeps rising. He also speaks at various local organizations educating the public on how to handle their IRS tax problems, small business credits and tax compliance issues. For speaking engagements or for tax related questions email noah.daniels@advancetaxrelief.com.
ADVANCE TAX RELIEF LLC - "WE SOLVE YOUR TAX PROBLEMS"
8449 W. BELLFORT, SUITE 356HOUSTON, TX 77071
Phone: (713)300-3965, (800)790-8574
www.advancetaxrelief.net
BBB
Accredited Business
Follow us on twitter: https://twitter.com/IRSTAXPRO
Advance Tax Relief on BBB: http://www.bbb.org/houston/business-reviews/taxes-consultants-and-representatives/advance-tax-relief-llc-in-houston-tx-90024857
Links
www.irs.govwww.advancetaxrelief.com
www.advancetaxrelief.net
www.google.com
www.forbes.com
back taxes help, federal tax lien help, file back taxes, handle auditor, handle auditors, help with IRS, IRS audit help, IRS bankrupcy, IRS bankruptcy, IRS letters, IRS levys, IRS liens, IRS tax consultants, lawyer to help with tax problems, letter from the IRS, www.advancetaxrelief.net, irs.gov, taxmasters, txmstr.com, jk harris, ronnie deuth, patrick cox, barack obama, george bush, politics, democratic party, republican party, tax reform, advancetaxrelief.com, tax attorney.
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