Tax Benefits for Education

Tax Benefits for Education

It’s August and many parents have children heading to college soon, and there are tax benefits for education. Are you aware you may qualify for some credits or deductions on your income tax return? Following is information you may find helpful regarding this topic: A tax credit reduces the amount of income tax you may have to pay. A deduction reduces the amount of your income that is subject to tax, thus generally reducing the amount of tax you may have to pay. An education credit helps with the cost of higher education by reducing the amount of tax owed on your tax return. If the credit reduces your tax to less than zero, you may get a refund. There are two education credits available: the American opportunity tax credit and the lifetime learning credit. You must meet all three of the following for either credit: You, your dependent or a third party pays qualified education expenses for higher education. An eligible student must be enrolled at an eligible educational institution. The eligible student is yourself, your spouse or a dependent you list on your tax return. If you’re eligible to claim the lifetime learning credit and are also eligible to claim the American opportunity credit for the same student in the same year, you can choose to claim either credit, but not both. In the past, there were also deductions you may have been able to take on your tax return. These included: Tuition and Fees –  The tuition and fees deduction could reduce the amount of your income subject to tax by up to $4,000. You could not claim the tuition and fees deduction as...
GO-Biz Accepting Applications for California Competes Tax Credit

GO-Biz Accepting Applications for California Competes Tax Credit

Would you be interested in having tax credits for your business? The third quarter application period is open for businesses interested in applying for the California Competes Tax Credit program. The program is provided by the Governor’s Office of Business and Economic Development (GO-Biz), which offers a variety of different services to help business owners including international trade development, regulation guidance, small business assistance, and assistance with state government. With information shared by the CalChamber’s website, you can learn how this program could potentially help your business and how you can apply. The California Competes Tax Credit is an income tax credit available to businesses that want to come, stay, or grow in California. Tax credit agreements are negotiated by GO-Biz and approved by a statutorily created “California Competes Tax Credit Committee,” consisting of the State Treasurer, the Director of the Department of Finance, the Director of GO-Biz, and one appointee each by the Assembly Speaker and Senate Rules Committee. This program is open to any business planning to create new full-time jobs in the state, regardless of size or location. Businesses can access the online application here. Applications must be submitted by August 21. Since 2014, GO-Biz has allocated $492.5 million to 688 companies projected to create 70,747 new jobs and $14.4 billion in new investments. Members of the CCTC team are available to provide technical application assistance. An application guide, Frequently Asked Questions (FAQs) and program regulations are available on the California Competes Tax Credit page. If you would like to learn more information on CCTA program, you can participate in an upcoming online webinar hosted by...
10 Things to Know About the Child/Dependent Care Credit

10 Things to Know About the Child/Dependent Care Credit

Are you a parent incurring child/dependent care costs so you can work? Are you aware you may qualify for a deduction on your tax return? If you paid someone to care for your child, spouse, or dependent last year, you may be able to claim the Child and Dependent Care Credit on your federal income tax return. Below are 10 things the IRS wants you to know about claiming a credit for child and dependent care expenses. The care must have been provided for one or more qualifying persons. A qualifying person is your dependent child age 12 or younger when the care was provided. Additionally, your spouse and certain other individuals who are physically or mentally incapable of self-care may also be qualifying persons. You must identify each qualifying person on your tax return. The care must have been provided so you – and your spouse if you are married filing jointly – could work or look for work. You – and your spouse if you file jointly – must have earned income from wages, salaries, tips, other taxable employee compensation or net earnings from self-employment. One spouse may be considered as having earned income if they were a full-time student or were physically or mentally unable to care for themselves. The payments for care cannot be paid to your spouse, to the parent of your qualifying person, to someone you can claim as your dependent on your return, or to your child who will not be age 19 or older by the end of the year even if he or she is not your dependent. You must...
IRS Website Offers Small Business Employment Tools

IRS Website Offers Small Business Employment Tools

Do you have trouble understanding and complying with the complex IRS payroll regulations for your small business? The IRS website offers tax resources for small businesses with products ranging from printable calendars, online calculators, a series of educational webinars and step-by-step guides. An article published on the CPA Practice Advisor website, helps inform entrepreneurs about the tools available to assist them with employment taxes. Federal law requires most employers to withhold federal taxes from their employees’ wages. IRS tools can help small businesses understand some of the requirements for withholding, reporting, and paying employment taxes. The IRS website, IRS.gov, provides easily accessible information and guides on what forms employers should use as well as how and when to deposit and report employment taxes. Federal Income Tax– Small businesses first need to figure out how much tax to withhold. Small business employers can better understand the process by starting with an employee’s Form W-4 and the withholding tables described in Publication 15, Employer’s Tax Guide. Social Security and Medicare Taxes– Most employers also withhold social security and Medicare taxes from employees’ wages and deposit them along with the employers’ matching share. In 2013, employers became responsible for withholding the Additional Medicare Tax on wages that exceed a threshold amount.There is no employer match for the Additional Medicare Tax and certain types of wages and compensation are not subject to withholding. Federal Unemployment (FUTA) Tax– Employers report and pay FUTA tax separately from other taxes. Employees do not pay this tax or have it withheld from their pay. Businesses pay FUTA taxes from their own funds. Depositing Employment Taxes– Generally, employers...
2 Simple Tax Changes That Would Fix Social Security for Good

2 Simple Tax Changes That Would Fix Social Security for Good

Did you know the Social Security Trust Fund is expected to run out of reserves by 2034? According to recent projections, in about 17 years benefits may need to be cut. These cuts could negativity affect American retirees’ who financially depend on Social Security. In an article from The Motley Fool, a investment website, Matthew Frankel writes on how combining two policy changes would ensure Social Security’s health for another 65 years. The Social Security funding gap and why tax increases are the logical solution As I’ve written before, Social Security is well-funded for the time being, but this isn’t expected to last too long. Specifically, the program is expected to start running at a deficit in 2020, and continue paying out more than it brings in for the foreseeable future. According to a report by the nonpartisan Congressional Budget Office, or CBO, the long-term funding deficit is projected to fluctuate between 1.5% and 1.9% of GDP from 2027 through 2082. So, it’s fair to say that the average annual deficit over the long run is expected to be about 1.7% of GDP. There are two ways to fix the problem — raise taxes or cut benefits — and there are dozens of options within those two categories. However, studies have shown that the vast majority of Americans of all ages, income levels, and political affiliations are opposed to Social Security benefit cuts in any form. Plus, according to the same CBO report, most forms of benefit cuts won’t have much of an impact on the funding deficit all by themselves. Tax increases, by contrast, are not just a...
7 Things To Do Right Now To Save On Taxes This Year (cont.)

7 Things To Do Right Now To Save On Taxes This Year (cont.)

In our preceding blog post, we discussed an article on what things you can start doing right now to save on taxes this year. Starting from reviewing your previous tax return to funding your health savings account, you can review the information we covered here: (http://bit.ly/2skq8IO). Today’s post will talk about how you can save more money for by making changes to your W-4, reviewing your estimate payments, and making an appointment with your tax professional. 5. Make Changes To Your W-4 Or Consider Changing Your Withholding. The form W-4 is the form that you complete and give to your employer – not the IRS – so that your employer can figure how much federal income tax to withhold from your pay. You typically fill out a form W-4 when you start a new job or at the beginning of the year. Generally, the more allowances you claim on your W-4, the less federal income tax your employer will withhold from your paycheck (the bigger your take home pay) while the fewer allowances you claim, the more federal income tax your employer will withhold from your paycheck (the smaller your take home pay). You want to get this number right since if you owe too much at tax time, you could be subject to an underpayment penalty. (For more on making changes to your W-4, check out this prior article.) 6. Review Your Estimated Payments. If you receive payments or other money throughout the year without having any federal income taxes withheld, you should consider making estimated payments. If you are filing as an individual taxpayer, you generally have...

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