Want to Owe Less?
I don’t know about you, but every year around this time as I gather all my personal information, expenses, tax info, etc. together, I wonder, “How much am I going to owe?” and “Is there anything else I have forgotten that I have paperwork and can be written off?” Vicki Allen of Allen & Associates Inc., Tax and Bookkeeping in Smyrna, Tennessee, explains that while you may not have all of these deductions to write off, here are six of the most common deductions that you can use to lower your taxable income.
Most people know the best way to save for retirement is to contribute to an IRA. This is also one of the best ways to lower your taxable income. Whether you contribute through your workplace or on your own, the government allows you to deduct up to $5,500 or $6,500 if you are 50 years old or older. You can double those amounts if you and your spouse both contribute.
The tax experts at Allen & Associates also explain that if you want to start an IRA or if you have not yet reached the maximum you can deduct on taxes, as long as you make your contribution by April 15th, 2015, you can say it is for 2014. Note...don’t forget to tell your IRA administrator that the contribution you are making is for last year.
And speaking of investing in your future, did you have any investments last year that you lost money on? You can deduct up to $3,000 of the loss against your regular income if your losses outweighed your gains.
The third common deduction to help your bottom line is un-reimbursed employee business expenses. While you need to be able to produce the receipts for proof in case of an audit, these are great deductions. Also, are you in outside sales and do a ton of driving but don’t get reimbursed for your mileage? Keep track of your numbers and you can claim 56¢ per mile. That is huge! There is also your food and hotel room if you traveled overnight for business, entertainment expenses if you were schmoozing a client, cost of a briefcase, etc. Just remember to keep your receipts and be ready to hand them over when you come into Allen and Associates to have your taxes prepared.
Next up is non-cash charitable contributions. Did you do some Spring Cleaning last year and then donate your gently used clothing, household items, etc.? Guess what, it’s deductible. The best thing you can do to keep track of your donated items (rather than just sticking a random value on two bags of clothing) is to go to the TurboTax ItsDeductible program and individually enter your donated items. It will give you a value that the government accepts. And once again, get a receipt. Goodwill, as well as other places people commonly donate to, will gladly give you one if you ask. (While it is not required for smaller amounts, if your donation is valued at $250 or more, the government wants you to have a receipt.)
Real estate taxes are another common deduction. Most people know that the real estate taxes they pay on their primary residence are deductible. This can be thousands of dollars depending on where you live. But did you know that you can also deduct the taxes you pay on a second home (like your vacation beach house) or any other property you own, even if it is not built on. There is no limit to the number of properties; if you pay real estate taxes on it, write them off.
The last of the six common deductions you can take to lower your taxable income is your Health Savings Account contributions. (This is only if your medical expenses are not over 10% of your adjusted gross income or if your don’t itemize.) When done in conjunction with a high deductible health insurance plan, contributing up to $3,300 or $4,300 if you are 55 or older into personal Health Savings Plan up until the tax deadline (April 15th) will reduce your taxable income.
Obviously, there are many other deductible items that can lower your taxable income that we have not listed here. Just remember to save your receipts and keep track of your business related mileage if that applies to you. In the meantime, give Allen and Associates, Inc. a call or visit their website at www.aasmyrna.com. Make your appointment today and let their tax professionals help you find all the deductions you are entitled to.
Congratulations on Your New Baby/Deduction
Diapers, formula, clothes that will be worn once before they are already too small, strollers and bouncy chairs...babies are expensive! Luckily the government offers deductions to help cover the costs of your newborn. Allen and Associates, Inc. Tax & Bookkeeping in Smyrna, Tennessee explains the child deductions and tax breaks available to you.
This first deduction is awesome. Whether you gave birth to your new bundle of joy on January 1st, 2014 or on the last day of the year, December 31st, 2014, you get to claim your baby for the entire year... to the tune of $3,950 as a matter of fact. Plus, if you have more than one child you can take that deduction times the amount of children you are claiming. Can I hear a, “Sweet!”?
But wait there’s more. (I sound like an infomercial, don’t I?) According to the tax experts at Allen & Associates, depending on your income (lower is better in this case), you could qualify for $1,000 per child in tax credit form. If your children are under the age of 17 this is great because unlike a deduction, a tax credit offsets your taxes dollar for dollar.
Are you a single mom (or dad) or have you been separated from your spouse for over six months? If so, you can claim head of household as your tax status. This affords you a much lower tax rate than claiming to be single.
Lower Tax Rate = Tax Savings :-)
Okay, next money saving idea...are you a working parent whose children are in daycare? That can be super expensive, even more so than having a baby in diapers at home. (Believe me, I know. I went back to work and it was almost a wash getting paid to work and paying for daycare.) That said, there is some good news. If your child is 13 or under (there is no age limit if your child is disabled), you may be able to claim up to 35% of the first $3,000 of daycare expenses (or $6,000 if you have two children under 13 years of age).
Also, it is not just daycare that counts towards writeoffs. Individual care (as long as the caregiver is over 19 years old...it can even be a relative), preschool, a private kindergarten, and even after school care at public schools like MAC or the YMCA all count. All you need to do is make sure to get the caregiver’s social security number for your tax return. But the tax professionals at Allen and Associates would like to remind you that if you are claiming daycare expenses and you are married, both you and your spouse must work in order to prove the need for daycare.
Keeping all this information in mind, Allen and Associates, Inc. Tax and Bookkeeping in Smyrna would like to help you get the deductions and tax credits you are eligible for. Please visit their website at www.aasmyrna.com to set up an appointment today and let them help you get all the money back you are entitled to. Now stop reading this and go change a diaper.
Maybe you had been dating for years and he finally popped the question. Maybe you are college sweethearts who are taking the next step. Or maybe you met each other on a dating site, it was love at first sight, and you eloped soon after. Whatever the scenario, you tied the knot in 2014 (even December 31st counts in the eyes of the law). Well now that tax season is upon is, do you know what you are going to do? Here a few tax tips from Allen & Associates, Inc. Tax and Bookkeeping in Smyrna, Tennessee to help you out.
This first one is for the ladies...did you change your name? If you did, you need to (or hopefully already did) contact the Social Security Administration and get a new card issued to you with your new name. This will save you a huge headache along with HOURS on the phone. I know from personal experience. (I apparently didn’t exist in the IRS’s minds because the name on my card was different from the one I filed under, even though my number remained the same. ) You don’t want to go through this mess, so please make that trip to the S.S. Admin ASAP.
Keeping on the subject of government agencies, you should complete Form 8822 if your physical address changed. (I’m assuming you moved in together since you are married:-) Doing this will help alleviate problems due to mismatched addresses in the IRSs database when you file your tax return.
Spread the good news with your boss. No really, let your boss, well actually the Human Resources Department, know about your recent status and name change. No, they won’t send you a nice gift from your registry, but they will send you a W-2 with your new name on it making it easier to file.
Deductions Baby! Yes, filing jointly may put you in a higher tax bracket if both you and your new spouse work, but you will also have more combined deductions which may lead to itemizing rather than taking the standard deduction. We’re talking more money in your pocket (or at least less owed). When you bring your papers and receipts into the tax experts at Allen and Associates, they will be able to prepare your taxes for both married filing jointly and separately to assure you the largest refund. Historically however, filing jointly will save you money.
There you have it, a little advice for all you newlyweds out there from the bookkeepers and tax experts at Middle Tennessee’s Allen & Associates, Inc. Also, for other tax tips or just to make an appointment to bring your taxes in, please visit www.aasmyrna.com. Happy tax season everyone!
Saving For Retirement? Check Out 2015’s New Tax Laws.
Most of us have dreams of retirement, a time when (hopefully) you are empty nesters and can travel, build your dream home, spoil the grandchildren, buy a sweet sportscar to tool around in, etc. But guess what...that all takes money. According to Allen and Associates, Inc., your tax and bookkeeping experts in Smyrna, TN, 2015 is shaping up to be a great year to either continue saving or begin saving for your retirement thanks to a few new tax laws.
Job Related Contribution Plan Limits Have Gone Up...Does your employer offer a 401(k) or 403(b) that you can contribute to? Well, lucky you; new tax laws state that you can contribute up to $18,000 now. This is also true for most 457 plans and the federal government’s Thrift Savings Plan. In addition, if you are an employee who is 50 years old or more and haven’t contributed much in the past, the yearly “catch-up” contribution limit has been raised to $6,000, for a total limit of $24,000 to help you out.
Do You Contribute to an IRA? If so, based on whether or not you or your spouse is eligible to participate in an employer-sponsored retirement plan, tax deductions for contributing to a traditional IRA have been phased out. Here’s the deal, If you are able to contribute to an employer-sponsored plan and your modified adjusted income is between $61,000 and $71,000 for an individual or between $98,000 and $118,000 for a couple, your investment is not tax deductible. The same holds true for people who do not have a retirement plan at work, but their spouse does. The limits, however, are different. Your IRA investment is not tax deductible if your income is between $183,000 and $193,000. Other than that, contribution limits for 2015 have not changed; the limit it still $5,500 for those under 50 years old and there remains a $1,000 “catch-up” limit for those over 50.
Roth IRAs Income Limits Have Increased by $2,000. Income limits for contributing to your Roth IRA have changed to $116,000 - $131,000 for individuals and for married couples the new income limits are between $183,000 and $193,000. The contribution limit is $5,500 (with an additional $1,000 catch-up amount for those over 50). But remember, if you have both a traditional and a Roth IRA, that $5,500 or $6,500 is the maximum amount you may contribute across both accounts total, not each.
Rollovers Have Been Limited...For those investors who like rolling their funds over from one IRA to another, remember this new tax law...you are now limited to one rollover per year. That said, you can do more, but it will cost you dearly at a price of a 10% early withdrawal penalty and a 6% per year excess contributions tax for each year your rollover remains in that new IRA. Can we say, “Ouch!”? Kind of defeats the purpose of saving, doesn’t it?. Okay, there is a silver lining too though and here it is. According to the tax professionals at Allen and Associates, Inc., there are no yearly limits on transfers between a traditional and Roth IRA or transfers between trustee to trustee. These are examples of direct rollovers, which in effect, are rollovers that do not let you take control of the money, sort of like when you roll your 401(k) over to an IRA when you leave your place of employment.
Do You Have a Flex Account? Many employees have the benefit of contributing to a Health Flexible Spending Account (FSA). This allows you to set aside up to $2,550 (up $50 from last year) pre-taxed dollars from your paycheck to use for health expenses (eyeglasses, doctor trips, visits to the dentist, prescriptions, etc.). It is a great tool for saving money, and since 2013 you have been able to rollover up to $500 to the next year if you did not use it all. Here’s the change...if you have any pre-taxed dollars left over and you decide to carry it over to the next year, you will now be inelegible to sign up for a HSA (Health Savings Account). Note: This does not apply to FSAs that are designated for a specific purpose such as for dependent care. That said, Smyrna, Tennessee’s Allen and Associates, Inc. suggests that if you would like to participate in a Health Savings Account, you may want to rethink rolling over the leftover funds at the end of the year, even if it means losing them.
Wow, that’s a lot of new tax information to take in, isn’t it? No worries, the tax and bookkeeping experts at Allen and Associates, Inc. have your back. Actually, if you call today, they can set up an appointment for you to sit down with them and they will figure out what the best way to take advantage of these new tax laws would be for you. Bottom line is, you want to retire the way you picture it in your dreams and they are here to help you on the tax end of it. In the meantime, visit their website at www.aasmyrna.com and then up your 401(k) contributions to the new limit of $18,000 if you are abe to. Happy tax season Middle Tennessee :-)
Well its that time of year again...you have gotten your various tax forms in the mail and now it’s time to start getting all your paperwork and receipts compiled to bring to your bookkeeper at Allen & Associates, Inc. in Middle Tennessee so they can complete your 2014 taxes. With that in mind, here are a few deductions if you plan on itemizing that you want to make sure you don’t overlook.
First up is Charitable Donations. Most people know you can write off your donations (i.e. a check you wrote to your church or another organization), but Allen & Associates would like to let you know there are a few small out of pocket obscurities you should be keeping track of. For example...
Did you prepare some food, like a casserole, for a non-profit organization such as a soup kitchen? Keep your grocery store receipt because you can write off the ingredients you purchased.
Did you donate stamps to your child’s school for a fundraising flyer they wanted to mail out? Once again, keep the receipt and write it off.
You are quite the philanthropist...Did you put miles on your car while donating your time for a charitable organization? You can deduct 14 cents per mile, plus any tolls or parking you had to pay for.
Second up are a few more deductions Allen & Associates in Smyrna, TN would like you to know about that you may have overlooked.
Were you amongst the millions of Americans who were out of work and looking for a job in your same line of work? 1.We hope you were successful in your quest to find new employment and 2. You better keep track of your expenses because even if you didn’t get offered a new job, you can still itemize your job-hunting costs. A few of them are: mileage, parking and tolls, overnight lodging if the job takes you away from your home (plus food and lodging during those overnight stays), cab fares, employment agency fees, the cost of printing and sending resumes...the list goes on and on.
Note that in the last section, we said if you are “out of work and looking for a job in your same line of work”... those write-offs do not include people looking for a first job (like right out of college). That said, your moving expenses to get to your first job (as long as it is 50+ miles away) are.
Are you a member of the National Guard or military reserve? The cost of your travel to meetings and drills can be written off. (Note: You must live 100 miles or more away from your home to claim overnight expenses.)
Don’t forget about Child Care Expenses (Note: If you pay for this with pre-tax dollars, don’t even think about double dipping on the benefits.)
Lastly, a few quick deductions Allen & Associates would like to remind you of when you bring your receipts into them to do your taxes this year:
Medical expenses (if they are more than 7.5% of your adjusted gross income).
Points charged to obtain your home mortgage.
Your car or boat registration...did you get charged a personal property tax? Allen and Associates in Smyrna, TN reminds you not to forget to include this tax deduction.
Did you do some Spring Cleaning last year? Don’t forget to ask for a receipt when you donate clothing, furniture, etc. . If your donations total more than 2% of your adjusted gross income, they are deductible.
On the same thought, if you donated your time to volunteer onsite, you may also be able to write off your travel expenses.
Instead of making an appointment with Allen and Associates, Inc. last year to handle your taxes, did you pull your hair out trying to do your own? 1. Your hair has (hopefully) grown back by now and 2. SURPRISE! If you paid for software to prepare your own taxes, you can deduct it.
If you purchased safety equipment for your job like steel toed boots or goggles, please bring those receipts into Allen and Associates along with your others.
Did you adopt a child, foster one, or pay for a foreign exchange student to stay with you? Write offs are there as well.
Allen and Associates in Smyrna, TN knows about many other deductibles you may benefit from in addition to the ones mentioned above, and they can bring them to your attention during your consultation. Remember, taxes must be filed on or before April 15th (unless there are special circumstances), so please, check out our website www.aasmyrna.com today and then call for an appointment to sit down with one of our professional tax advisors.
Is a 1099 Form Like a W-2?
So the question of the day is….Is a 1099 Form like a W-2? Well, the answer is yes and no. Yes, both forms are required to be mailed to you by January 31st so you can complete your taxes. And yes, both forms list your income from a company. Now that said, Allen and Associates, Inc., the tax and bookkeeping specialists in Middle TN, explain that there are definite differences between the two.
A W-2 is a form you will receive from your employer to show the wages you made throughout the year, as well as the taxes, social security and medicare that were withheld. But what if you are a contractor and not really an employee? For example, you get hired for jobs and get paid, but no taxes, etc. are withheld from your paycheck. Guess what...this is not getting paid under the table as some like to call it. You will be receiving a 1099 in the mail, and yes, you need to claim your earnings.
That said, Allen and Associates, which by the way you can find on the web at www.aasmyrna.com, informed me that there are various types of 1099s you need to look in your mailbox for.
Independent Contractor - If you received $600 or more this past year from an employer, you will receive a Form 1099-Misc. You will recieve this from each employer you made over $600 from in 2014. Some examples of contract workers are freelance writers, consultants and construction workers.
Stockholder or Investor? There may be forms in the mail for you as well. If you own mutual funds or a portfolio of stocks and investments, you will be receiving a Form 1099-DIV in the mail because you are required to claim any dividends you received throughout the year.
Do you have a savings account? If you earned interest throughout the year on the money in savings, your bank will be sending you a 1099-INT in the mail.
Were you unemployed in 2014? If so, the government (yeah, the same one you have to pay taxes to) will send you a 1099-G to report your unemployment compensation.
Okay, only two more 1099s to go...Next up is the 1099-R. If you have made a withdrawal from your traditional IRA or have had a distribution from your pension plan, annuity or profit-sharing plan, expect this form in the mail. (And FYI..if it is an early distribution, expect to be taxed heavily).
The last one is the 1099-C. This may sound uncommon, but these days it is more common. Did you have problems paying your bills this year? It happens to the best of us. You opt to pay your electricity bill rather than your credit card. Allen and Associates understands. But that said, just know that if your credit card company writes off your total amount due and says you are paid in full if you pay 25%, you will most probably receive a 1099-C in the mail and you will have to pay taxes on the amount written off by them.
So there you have it...soooo many types of 1099’s you could possibly receive. Whether you are an individual contractor or an investor, just know they could come in the mail by January 31st. And remember, once you receive all your W-2s and 1099s in the mail, all you need to do is give Allen and Associates a call to set up an appointment to do your taxes. Don’t worry, they know all the current laws and will make it their goal to get you the most money due to you (or have you owe the least amount possible). Happy tax season:-)
U2, 2 B or Not 2 B, W-2?
Okay, I admit I would rather be at a U2 concert or a Broadway play of Hamlet hearing that quote...but it is the time of year when one must deal with a different “2”...THE W-2. As funny as that sounds, it’s true. If you are a hard working American, you are probably expecting your W-2 Form in the mail from your employer any day now.
Maybe you’ll be getting one, maybe two, whatever, you should receive them in the mail by January 31st, 2015. So what are you going to do now? Are you going to let them sit in a pile of paperwork that has been building up for months? Are you going to throw them in a box and deal with them later (hopefully by April 15th)? Or, now here’s a cool idea...why not bring them into Allen and Associates, Inc., Tax and Bookkeeping in Middle Tennessee and let them take care of everything for you.
Allen and Associates, Inc., located in Smyrna, Tennessee, has been providing businesses and individuals with all their accounting and bookkeeping needs for several years. The owner, Vicki, graduated with an accounting degree from the University of Arkansas, and has been working for over twenty years with various accounting firms. In other words, she is not only passionate about accounting, but she loves her work, and would love to help you.
Do you have receipts laying around in a bag (That’s a nice way of asking if they are all over your desk, floor, or stuffed in your purse, and will be thrown into a bag to be brought in.)? Do you have a box where you have neatly laid all the receipts in order by date (Yeah, I’m being nice again.)? Or are you totally awesome and have all your W-2s in order, receipts, etc. in order and you seriously just don’t want to deal with doing your own taxes this year?
Whatever the case may be, Allen and Associates, Inc., Tax and Bookkeeping, would love to extend to you the personal service they are able to provide due to years of experience in the tax business. They are knowledgable and up to date on all the tax laws….and yes, no matter how you bring your receipts in (bag, box, or neat portfolio), they will be able to make sense of them and get you the best tax return turnout ever….We’re talking deductions, baby :-)
Hey, just so you know, Allen and Associates, Inc. can be found on the web at www.aasmyrna.com if you would like to check out all the other accounting services they offer. Personal or business, they can help you with your daily accounting needs, QuickBooks, payroll services, bank/credit card reconciliation, tax preparation, etc. You name it, they got your back.