Tax Breaks for Grandparents Raising Their Grandchildren

Tax Breaks for Grandparents Raising Their Grandchildren

Are you a grandparent caring for grandchild(ren) or think you may be soon? I read a blog written by Robert Trinz that shares deductions you may be able to take on your tax return. Read more to see what may apply to your situation. Tax breaks you may be able to use include: Head of household filing status -This is often more favorable than single (of course if married, you would most likely select married filing jointly). Exemption for the child – A taxpayer is entitled to a deduction equal to the exemption amount for each person who qualifies as his or her dependent. Earned income credit – To qualify on account of grandchildren, the AGI must be less than certain specific amounts that depend on the number of qualifying children the grandparent has. Child tax credit – Individuals may claim a maximum $1,000 for each qualifying child the taxpayer can claim as a dependent. Credit for child and dependent care expenses – The maximum amount of employment-related expenses that may be used to compute the credit is $3,000 for one qualifying individual, or $6,000 for two or more qualifying individuals. Credits or deductions for qualified education expenses – There are a number of tax breaks that may be available to a grandparent who pays his or her grandchild’s education costs. Deductions for medical and dental expenses – An individual who itemizes can deduct the amount by which certain unreimbursed medical and dental expenses paid during the year for himself or herself, his or her spouse, and his or her dependents exceed 10 percent of his AGI. Adoption expenses – In addition to adoption fees, qualified expenses...
Will Trump’s New Healthcare Bill Impact Your Taxes?

Will Trump’s New Healthcare Bill Impact Your Taxes?

If you’ve heard about the new healthcare bill President Trump wants to pass, there are some things you need to know on how it might affect you and your taxes. In a brief blog post, written by Kent Livingston, he discusses the new proposal and how it could bring about noteworthy changes of which you should be informed. Since President Trump and his administration took office in January there has been much hubbub about the Affordable Care Act, otherwise known as Obamacare. Of course, this was a hot topic throughout the campaign and it has remained on the forefront of the new administration’s agenda since they took control of the White House. After a previous attempt to repeal the ACA failed in March, early May the Trump administration introduced another plan that passed the House in its first attempt: the American Health Care Act, or AHCA. However, that doesn’t mean the fight is over. In fact, the bill still has to clear the Senate and at this point the outcome is anything but certain, with many senators already opposing the bill. Significant Changes In any case, the new proposal would lead to several significant changes, including changes to your taxes, if it does become law, and therefore you should be aware of how it would affect you should it pass. No Penalty for Not Having Insurance – For starters, one of the biggest complaints about Obamacare was the individual mandate to have insurance and the penalty for not complying. The new bill would eliminate this penalty and thus save taxpayers who choose to go uninsured hundreds of dollars a...
Tax Changes In 2017 You Need To Know About

Tax Changes In 2017 You Need To Know About

With the IRS guidelines changing from year to year, there is a lot of stress on taxpayers trying to stay up-to-date with current information. Mairye Bates, from H&R Block’s Block Talk, keeps you stress-free and knowledgeable on the tax changes occurring this year. Maybe you worry about the correct way to track and report your income and expenses, or perhaps you wonder about the rules for deducting retirement savings accounts. Or maybe you’re wondering about healthcare insurance topics. Here are some tax changes in 2017 that will help you stay on top of things this upcoming tax season. For 2017, the IRS has instituted some changes that you should know about. These changes apply broadly to all American taxpayers: Standard Tax Rates 2017 2016 Personal Exemption $4,050* $4,050* Standard deduction – Single, or Married Filing Separate $6,350 $6,300 Standard deduction – Head of Household $9,350 $9,300 Standard deduction – Married Filing Joint $12,700 $12,600 Earned Income Credit – Maximum Amount $6,318 $6,269 *Subject to phase out for Adjusted Gross Income starting at $261,500 ($314,000 for Married Filing Jointly) Personal Taxes Health Insurance For 2017, the amount used to calculate the penalty for not maintaining minimum essential health coverage is $695 or 2.5% of household income, whichever is higher. There are no changes to Marketplace Insurance. Remember, if you are a small business owner, you may be able to deduct your health insurance and long-term care premiums as an “above the line” deduction on your personal return, if you meet some conditions. This means that you are not limited by the 10% of AGI threshold for medical expenses. If you...
Which IRS Violations Are Evasion Or Willful Depends On The Facts

Which IRS Violations Are Evasion Or Willful Depends On The Facts

Taxes are usually such a difficult subject, but with the helpful guidance of Robert W. Wood, dealing with the IRS can be more easily understood. In his article written on Forbes.com, Robert discusses how penalties could affect you whether or not your violation was intentional and how much it could cost you. The tax law distinguishes between non-willful and willful conduct. Willfulness involves a voluntary, intentional violation of a known legal duty. In taxes, it applies to both civil and criminal violations. Big penalties and even prosecution can hang in the balance. Innocent mistakes can be forgiven, but conduct that appears to be intentional can be a different story. Many people think that even civil penalties cannot be imposed if you were not actually trying to cheat anyone. However, intent can sometimes be inferred from conduct. The definition of willfulness causes many people to think that their conduct is not likely to be examined, and that their own knowledge is entirely subjective. If you didn’t know you had a legal duty to report income or a foreign bank account, you might reason, how can you be treated as willful? Unfortunately, it is not that simple. Take the recent case of Arthur Bedrosian v. U.S. Reported here. In the early 1970s, he opened two Swiss bank accounts. An accountant prepared his tax returns, and Bedrosian did not inform the accountant about the Swiss accounts. In the 1990s, he finally mentioned them to the accountant, who said that he had been breaking the law for years by failing to report. Even so, the accountant said that he should do nothing. He...
IRS Offers Tips to Prepare for Hurricanes, Floods and Other Natural Disasters

IRS Offers Tips to Prepare for Hurricanes, Floods and Other Natural Disasters

Now that Hurricane Preparedness week has started and the upcoming Atlantic hurricane season begins June 1st, the IRS has published some advice on their website to those who may be affected by these storms along with other types of natural disasters. The IRS wants to help taxpayers as much as possible and is offering a toll-free hotline to those in federally declared disaster areas. Don’t Forget to Update Emergency Plans Because a disaster can strike any time, be sure to review emergency plans annually. Personal and business situations change over time, as do preparedness needs. When employers hire new employees or when a company or organization changes functions, they should update plans accordingly and inform employees of the changes. Make plans ahead of time and be sure to practice them. Create Electronic Copies of Key Documents Taxpayers can help themselves by keeping a duplicate set of key documents including bank statements, tax returns, identifications and insurance policies in a safe place such as a waterproof container and away from the original set. Doing so is easier now that many financial institutions provide statements and documents electronically, and financial information is available on the Internet. Even if the original documents are provided only on paper, these can be scanned into an electronic format. This way, taxpayers can download them to a storage device such as an external hard drive or USB flash drive, or burn them to a CD or DVD. Document Valuables It’s a good idea to photograph or videotape the contents of any home, especially items of higher value. Documenting these items ahead of time will make it...
How to Write Off Hobby Expenses

How to Write Off Hobby Expenses

In the last post, we discussed the factors used to determine if the activity in which you are engaged is a hobby or a business. To read that post, click  http://affordablebookkeepingandpayroll.com/hobby-really-business/. Today we’re going to discuss how to take deductions on your tax return if it’s deemed the activity is truly a hobby and not a business. If an activity is not for profit, losses from that activity may not be used to offset other income. An activity produces a loss when related expenses exceed income. The limit on not-for-profit losses applies to individuals, partnerships, estates, trusts, and S corporations. If you earn income from your hobby, it must be reported on your tax return, but it can be offset by expenses incurred.  Here are tax tips you need to know about hobby deductions: Allowable Hobby Deductions.  Within certain limits, you can usually deduct ordinary and necessary hobby expenses. An ordinary expense is one that is common and accepted for the activity. A necessary expense is one that is appropriate for the activity. Limits on Hobby Expenses.  Generally, you can only deduct your hobby expenses up to the amount of hobby income. If your hobby expenses are more than your hobby income, you have a loss from the activity. You can’t deduct the loss from your other income. How to Deduct Hobby Expenses.  You must itemize deductions on your tax return in order to deduct hobby expenses. Your expenses may fall into three types of deductions, and special rules apply to each type. Deductions that a taxpayer may claim for certain personal expenses, such as home mortgage interest and taxes, may...

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