A checklist to ensure you have a successful tax-day?

If you are confused on what documents are necessary to help you have  a successful tax-day, we have put together a short list of items that may make it a little easier on you and your accountant.

Income-related documents: Bring any & all W-2, 1098, 1099 & schedule K-1 forms. 

Expense-related documents: 

• Childcare expenses
• Moving expenses
• Work-related expenses such as uniforms, tools, or education
• Student loan interest
• IRA contributions
• Medical expenses
• Charity contributions 
• Real estate and property taxes paid
• Alimony paid or received

 The key to having a good tax season is by keeping good records. 
"To be prepared is half the victory." - Miguel de Cervantess

Last years tax return: Bring last year’s tax return for reference, as you may qualify for some of the same deductions and this will make it easier to calculate this years return.

Goals: You may not realize that your accountant is also available to discuss your financial goals and will assist you in reaching those goals by making short and long-term goals.

To meet our team and for guidance on how to navigate through this tax season - please contact Ken Anaya at: (844) KAA-4TAX or (844) 522-4829

Going Green Could Reduce Your Taxes

By definition, a “green home” is an environmentally sustainable building, designed, constructed and operated to minimize the total environmental impacts it also focuses on the efficient use of energy, water, and building materials. A green vehicle, or clean vehicle, or eco-friendly vehicle is a road motor vehicle that produces less harmful impacts to the environment than comparable conventional internal combustion engine vehicles running on gasoline or diesel, or one that uses certain alternative fuels. The following information was taken directly from the IRS website and provides helpful tips on how going green can help you become more financially responsible, create a smaller carbon footprint, and improve your home's resale value.

 

When you invest in energy-efficient products, you may be saving money on both your energy bills and your tax return. The Internal Revenue Service wants you to know about these six energy-related tax credits created or expanded by the American Recovery and Reinvestment Act of 2009 Residential Energy Property Credit. This tax credit is for homeowners who make qualified energy efficient improvements to their existing homes. 

This credit is 30 percent of the cost of all qualifying improvements. The maximum credit is $1,500 for improvements placed in service in 2009 and 2010 combined. The credit applies to improvements such as adding insulation, energy efficient exterior windows and energy-efficient heating and air conditioning systems. Residential Energy Efficient Property Credit. This tax credit will help individual taxpayers pay for qualified residential alternative energy equipment, such as solar hot water heaters, solar electricity equipment, geothermal heat pumps and wind turbines installed on or in connection with their home located in the United States and qualified fuel cell property installed on or in connection with their main home located in the United States. The credit, which runs through 2016, is 30 percent of the cost of qualified property. ARRA removes some of the previously imposed annual maximum dollar limits.

 

• Plug-in Electric Drive Vehicle Credit ARRA modifies this credit for qualified plug-in electric drive vehicles purchased after Dec. 31, 2009. The minimum amount of the credit for qualified plug-in electric drive vehicles, which runs through 2014, is $2,500 and the credit tops out at $7,500, depending on the battery capacity. ARRA phases out the credit for each manufacturer after they sell 200,000 vehicles.

• Plug-in Electric Vehicle Credit This is a special tax credit for two types of plug-in vehicles — certain low-speed electric vehicles and two- or three-wheeled vehicles. The amount of the credit is 10 percent of the cost of the vehicle, up to a maximum credit of $2,500 for purchases made after Feb. 17, 2009, and before Jan. 1, 2012.

• Credit for Conversion Kits This credit is equal to 10 percent of the cost of converting a vehicle to a qualified plug-in electric drive motor vehicle that is placed in service after Feb. 17, 2009. The maximum credit, which runs through 2011, is $4,000.

• Treatment of Alternative Motor Vehicle Credit as a Personal Credit Allowed Against AMT Starting in 2009, ARRA allows the Alternative Motor Vehicle Credit, including the tax credit for purchasing hybrid vehicles, to be applied against the Alternative Minimum Tax. Prior to the new law, the Alternative Motor Vehicle Credit could not be used to offset the AMT. This means the credit could not be taken if a taxpayer owed AMT or was reduced for some taxpayers who did not owe AMT.

Got money to Pay the IRS on April 18th?

So, you don’t have the money to pay the IRS by the April 18 deadline? Don’t make the dumb and expensive mistake of not filing your tax return. Instead, you should apply for an extension. 

You can defer paying your tax bill until later. But, you will be charged penalties and interest until the tax is filed and paid-in-full. Do not just sit on the couch and do nothing. If you do nothing you will be penalized to the tune of 5% of the unpaid balance each month, up to a total of 25% (after five months). After that, you’ll be charged interest at the 0.83% per month. If an extension is filed it will give you until October 17, 2017 to file. If you are still short come October you can then try to arrange for an installment agreement to pay your tax debt.  

See IRS Form 9465 for more details on how to apply for an installment agreement or talk with your Tax preparer, Ken A. Anaya about this form.

Do you get the full credit as Boss of the House?

A very common mistake is for an unmarried individual taxpayer filing status as a “Single” taxpayer when they qualify for the much-more tax favorable “Head-of-Household” (HOH) filing status.

Your filing status is used to determine which standard deduction you are eligible for and what tax credits will be available. Discuss this topic with your tax preparer as they will need to evaluate the one that will result in the lowest amount of tax that is best for you. 

 

Talk with your Tax preparer Ken A Anaya about this deduction.

Did you purchase a New Home in 2016?

If you bought a home last year, you will find a tax write-off buried under all the paperwork accumulated from the slew of documents your escrow company provided. You are able to deduct mortgage points paid by the seller. It is best to bring your final escrow documents when having your taxes prepared. I know that being able to write off an expense someone else has paid for sounds too good to be true. But it is true, so bring this paperwork when having your taxes prepared. 

Talk with your Tax preparer Ken A Anaya about this deduction.

Did you make any Charitable Contributions in 2016?

It is best to have all charitable contributions in receipt form to back up the donation of $250 or more. The tax law says no write-off is allowed should you not have a receipt or letter from the organization. Cash donations of less than $250 made in 2016 are not allowed unless you retain either a bank record that proves the donation. Like for example, a canceled check, bank statement, or debit/credit card statement. Taking it one step-up is to have a written acknowledgment from the organization on their letterhead. Small undocumented cash contributions, such as money placed on church collection plates and cash dropped in red buckets (Salvation Army) at Christmas time won't qualify for write-offs. Get a receipt or have a canceled check from the charity to lock in your rightful tax break.

As for noncash charitable donations of used clothes and household items, you get no deduction unless the stuff is in “good” condition. “Household items” include furniture and furnishings, electronics, appliances, linens, and the like. In other words, you get no charitable write-off for donated junk. See IRS Form 8283 at www.irs.gov for more details on the rules for noncash donations. 

Talk with your Tax preparer: Ken A Anaya about this deduction.

Stop the guessing game of when you will receive your tax refund

Here is a simple chart to follow from the IRS compliments of K.A.A. Data Accounting & Tax.

Have new additions to the Family?

Very Important!!

If you have a new little bundle of joy who was born in 2016, don’t forget to bring their Social Security card when meeting with your Tax professional. As it is required in order to claim your rightful personal exemption valued at $4,050 for 2016.

You are losing money doing your own taxes!

Whether you are a Traditionalist, Baby Boomer, or a member of Generation X or Y. Many believe that doing their own taxes will save them money. If you have a very simple return with no deductions, then sure, filing is easy. Not real common, as there is always something going on (i.e. taking a night class could earn Educational Credits, withdrawing on an IRA or 401K after leaving an employer that didn't work out. Not knowing if you will be charged a penalty for early withdrawals. Or things get more complicated when you have kids, a house, business deductions, itemized deductions, stocks, bonds and other complicated financial transactions, doing a return yourself is almost never a good idea.) The income tax code contains 1.4 million words and no software purchased by the average middle-income taxpayer can identify which avenue to take you down. If anyone that has experienced this problem can relate. Taxpayers that try to save a buck and self-prepare, spend 5.4 billion hours each year trying to complete their own taxes. Not to scare anyone but tax audits are on the rise. In 2016 the total number of individual tax audits topped 1 million for the first time since 1999. According to the IRS that number will likely increase in the years to come. The IRS announced plans to add more than 2,000 positions to its audit force this year.

Currently, 1 in 107 returns are audited for those making over $100,000.00 and 1 in 63 returns are audited for those making less than $100,000.00. Money is not saved when doing your own taxes. The refund facts clearly show that $1,492 is the average refund for self-filers and $1,789 is the average refund for taxpayers using a tax professional. Hiring a tax professional not only saves you countless hours but will also save you hundreds of dollars. Contact us today! 

K.A.A Data Accounting & Tax Services, call (844) KAA-4TAX or visit our site: www.KAA4Tax.com. 

 

         


         

Plan now to Use your Health FSA in 2017

Eligible employees, now is the time to begin planning to take full advantage of their employer’s health flexible spending arrangement (FSA) during 2017.

(FSA's) provide employees a way to use tax-free dollars to pay medical expenses not covered by other health plans. Because eligible employees need to decide how much to contribute through payroll deductions before the plan year begins, many employers this fall are offering their employees the option to participate during the 2017 plan year.

Interested employees wishing to contribute during the new year must make this choice again for 2017, even if they contributed in 2016. Self-employed individuals are not eligible.

An employee who chooses to participate can contribute up to $2,600 during the 2017 plan year. Amounts contributed are not subject to federal income tax, Social Security tax or Medicare tax. If the plan allows, the employer may also contribute to an employee’s (FSA).

Throughout the year, employees can then use funds to pay qualified medical expenses not covered by their health plan, including co-pays, deductibles and a variety of medical products and services ranging from dental and vision care to eyeglasses and hearing aids. Interested employees should check with their employer for details on eligible expenses and claim procedures.

Under the use or lose provision, participating employees often must incur eligible expenses by the end of the plan year, or forfeit any unspent amounts. But under a special rule, employers may, if they choose, offer participating employees more time through either the carryover option or the grace period option.

Under the carryover option, an employee can carry over up to $500 of unused funds to the following plan year — for example, an employee with $500 of unspent funds at the end of 2017 would still have those funds available to use in 2018. Under the grace period option, an employee has until 2½ months after the end of the plan year to incur eligible expenses — for example, March 15, 2018, for a plan year ending on Dec. 31, 2017. Employers can offer either option, but not both, or none at all.

Have questions visit our website at: www.kaa4tax.com or call (844) KAA-4Tax.

Look for your W-2 more timely in the New Year!

Enacted last December, our government created a new law which means employers need to file their copies of Forms W-2 and 1099’s by Jan. 31. These forms also go to the Social Security Administration (State of California) much faster this year. Employers reporting Employee earnings and non-employee compensation such as payments to independent contractors (for example Sub-Contractors in the Construction industry, Commissions earned in Real Estate, or Rents paid in Nail and Beauty Salons) submitted to the IRS are now due Jan. 31. Employers have long faced a Jan. 31 deadline in providing copies of these forms to their employees but were not always followed. That date has not changed but now must be filed with the IRS and State of California.

In the past employers normally had until the end of February, if filing on paper, or the end of March, if filing electronically, to send in copies of these forms. Now the IRS is working with the payroll community and other partners to spread the word as January 31, 2017 is now the DEADLINE.

The reason for the change is to helps stop fraud or errors. The new Jan. 31 deadline will help the IRS to spot errors on returns filed by taxpayers. Having these W-2s and 1099s sooner will make it easier for the IRS to verify legitimate tax returns and get refunds to taxpayers eligible to receive them. The changes will allow the IRS to send some tax refunds faster. Please contact us should you have any questions with this blog (844) KAA-4TAX or www.KAA4Tax.com