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1 week ago
Tax Breaks for Adult Students
Kids aren’t the only ones heading back to school this fall. Many adults are also taking courses to pursue a new career or improve their current job skills. Fortunately, adult students may qualify for several tax breaks. Here are four possible options:
• American Opportunity Tax Credit (AOTC). The AOTC is one of two credits for qualifying higher education expenses. The maximum credit of $2,500 is phased out based on income. To qualify, you must be enrolled at least half-time and not have finished four years of higher education. The credit does not rule out your eligibility because of age.
• Lifetime Learning Credit. If you can’t claim the AOTC, you may be able to use the lifetime learning credit (because you can generally only claim one credit in a tax year). The maximum lifetime learning credit is $2,000, as opposed to $2,500 for the AOTC, and there is an income phaseout that occurs at lower income levels than the AOTC. But you don’t have to be enrolled half-time and the credit isn’t restricted to four years of study. It’s even available if you take just one class.
• Student loan interest deduction. Do you need to borrow money to pay for schooling? If you qualify, you can deduct up to $2,500 of your annual student loan interest on your tax return. The deduction is subject to a phaseout based on income. Keep in mind that to claim this deduction, you need to be the one who is repaying the loan.
• Educational assistance plans. Perhaps the best way to go back to school is to have your employer pay for it. With a written educational assistance plan that meets all the tax law requirements, the first $5,250 of education expenses paid by your employer is tax-free to employees and deductible by the employer. The coursework doesn’t even have to be job-related.
Education tax breaks aren’t just for kids. Each of these educational tax saving opportunities is filled with additional rules and requirements. Please call for a review of your situation.
#TaxBreak #TaxCredit #HigherEducation #College #GradSchool #AOTC #LifetimeLearningCredit #StudentLoans #TaxSeason2019 #Education ... See MoreSee Less
2 weeks ago
Consider the Tax BEFORE You Sell
Multiple tax rates hold the key
In times of market volatility or when a financial need arises, it is only natural to consider selling some investments. Understanding the tax consequences is key to making an informed and planned decision.
Understanding the tax consequence of selling an investment can be complicated. Your #tax obligation could be subject to no tax or up to 37 percent plus an additional 3.8 percent for the net investment income tax. Here are some ideas to consider:
Within retirement accounts
• Generally not taxable. Selling investments within your retirement accounts is not usually a taxable event. The potential tax event occurs when you take the funds out of your account either by a withdrawal or occasionally as a rollover into another account.
• Follow the account rules. Each of your retirement accounts has its own set of rules. If you follow them, you can avoid early withdrawal penalties. Following the holding period rules within Roth accounts can also make your withdrawals tax-free.
Gains and losses outside of retirement accounts
• Losses. Your losses are first used to offset any investment gains. Any excess losses can offset your ordinary income up to $3,000 per year. So the benefit of losses can be worth next to nothing or up to 37 percent if it offsets ordinary income.
• Non-investment losses. Unfortunately, individuals may not offset losses on the sale of non-investment property. So if you sell a car and make money, you need to report the gain. If you sell the car and lose money, there is no deductible loss unless it is part of a business transaction.
• Long-term better than short-term. Holding an investment for longer than one year is key if you want to minimize your tax obligation. Short-term gains are taxed the same as wages.
Remember your investment decisions can often have quite different tax consequences. The best suggestion is to seek advice BEFORE you sell.
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Help Older Adults Stand Up Against Scams
The Consumer Financial Protection Bureau recently reported in financial exploitation cases that older adults lost an average of $34,200. Unfortunately, these funds are often never recovered. You can ensure this doesn't happen by learning more about scams and how to protect yourself. Here are some tips:
• Recognize the scams.The best way to protect yourself from a scam is to understand what they look and sound like. Here are a few key elements to look for when identifying a scam: Did you know? IRS impersonation scams are the No. 1 scam targeting older adults, according to the Treasury Inspector General for Tax Administration, with more than 2.4 million Americans targeted.
o You are promised a great offer or benefits
o You are forced to make quick decisions
o You are pressured to provide financial and/or personal information
o You are threatened
• Know why you are a target. You and other older adults may be targeted because you own a home, and have retirement savings and exceptional credit — a treasure trove for con artists to pillage. Scammers take advantage of trusting older adults because they’re less likely to say no and sometimes have cognitive issues that affect decision-making skills. In other cases, family members and non-related caregivers may have easier access to their funds, making them more susceptible to theft.
• Keep your personal and financial information safe. Keep your bank information, Social Security card and other finances stored somewhere secure in your home. Think twice about what you are sharing on Facebook, and don’t give out your Social Security or account numbers without vetting the person or company asking you for it. Con artists find useful information on social media sites about your family members and then pretend to be a relative who asks for money, or they could directly ask you for sensitive information over the phone or via email.
• Hang up if you feel uncomfortable. Don’t worry about being impolite if someone on the phone is pressuring you into sharing sensitive information. Hang up. If the call comes from a company you trust, you can call back and ask for the department that handles your account to determine if the call is for a legitimate reason.
• Turn down unsolicited offers. If you receive a call or an in-person visit from someone you don’t know selling you a product or service you didn’t request, turn it down or tell them you’ll decide at a later time. If the service or product interests you, conduct independent research on three suppliers. Proactively contact all three and determine the best offer. Include a trusted family member in the decision-making process. Doing this can effectively eliminate most scams.
• Use direct deposit. You can avoid having your checks stolen when you arrange for your checks to be directly deposited into your bank account. Ask your bank to show you how.
• Speak up if you think you’re a scam victim. There’s no need to feel embarrassed or ashamed if you think you’ve been scammed. Instead, let people know right away.
o Call your bank and/or credit card companies.
o Reset your account passwords.
o Call the police to report stolen property.
o Submit a consumer complaint using the FTC consumer Complaint Assistant.
o Report the scam by calling the United States Senate Special Committee on Aging Fraud Hotline at 1-855-303-9470.
o If you suspect elder abuse is also involved, contact adult protective services.
#CaiafaCompany #Accounting #Accountants #CPA #EnrolledAgents #Scams #IdentityTheft #Fraud ... See MoreSee Less
Select the Right Health Insurance for Your Business
If you have employees, you know how important health insurance is for your benefits package. It also takes a big bite out of your budget. Selecting the right insurance for your company is extremely important for employee retention and maintaining your bottom line. Here are tips to help you find the best health insurance for your business:
1. Know the size of the network. A popular way to lower insurance costs is opting for a smaller network of health care providers. Known as narrow provider networks, coverage is limited to a much smaller group of clinics and hospitals than traditional plans. But while the cost savings are nice, employee satisfaction is likely to decline as some of them will have to change doctors to stay in network. When researching insurance options, be sure to compare the network size to industry averages.
2. Watch for coverage limits. Lifetime and annual dollar limits for essential health benefits were banned in 2014, but limits still appear in other ways. Dental services, for example, are exempt from the dollar limits and often have annual and lifetime coverage limits. Another way insurance providers hedge their risk is by limiting the number of a certain type of visits, like for chiropractic care or physical therapy.
3. Don’t forget prescription coverage. Many health insurance programs don’t include full coverage for prescription drugs, so you may need to add supplemental insurance. Pay special attention to the coverage differences between brand name and generic drugs. Also review any deductibles and other limits. Another type of coverage available is a prescription discount program. Discount plans simply charge you a subscription cost that allows you to use a contracted discount.
4. Understand what isn’t covered. When trying to sell you on their plan, insurance providers do a good job showing you what they cover. What can be harder to figure out is what they don’t cover. Some of the types of services that may not be covered are vision care, nursing home care, cosmetic surgery, alternative therapies like massage therapy or acupuncture, and weight-loss procedures.
5. Be prepared to provide employee data. The process of obtaining a quote for health insurance can be an overwhelming task. Health insurance companies will want, at a minimum, a list of employees with some pertinent details like age, sex, coverage details (self, spouse and other dependents), and home zip code. They will want the forms filled out by all employees, even those that are opting out of insurance coverage. If you are working with a benefits broker, they can help you prepare what will be needed in advance to speed up the process.
Shopping for health insurance for your business is complicated. Taking the appropriate time to understand each coverage option and the associated costs will benefit both your business and your employees' wellbeing. #CaiafaCompany #Accounting #Accountants #CPA #EnrolledAgents #HealthInsurance #EmployeeBenefits #BusinessOwners ... See MoreSee Less
4 weeks ago
The IRS Is Not Always Right
A letter in the mailbox with the IRS as the return address is sure to raise your blood pressure. Here are some tips for handling the situation if this happens to you:
• Stay calm. Try not to overreact to the correspondence. They are often in error. This is easier said than done, but remember the IRS sends out millions of notices each year. The vast majority of them correct simple oversights or common filing errors.
• Open the envelope. You would be surprised at how often people are so stressed by receiving a letter from the IRS that they cannot bear to open the envelope. If you fall into this category, try to remember that the first step in making the problem go away is to simply open the correspondence.
• Carefully review the letter. Understand exactly what the IRS thinks needs to be changed and determine whether or not you agree with its findings. Unfortunately, the IRS rarely sends correspondence to correct an oversight in your favor, but its assessment of your situation is often wrong.
• Respond timely. The correspondence should be very clear about what action the IRS believes you should take and within what timeframe. Delays in responses could generate penalties and additional interest payments.
• Get help. You are not alone. Getting assistance from someone who deals with this all the time makes going through the process much smoother.
• Correct the IRS error. Once the problem is understood, a clearly written response with copies of documentation will cure most of these IRS correspondence errors. Often the error is due to the inability of the IRS computers to conduct a simple reporting match. Pointing the information out on your tax return might be all it takes to solve the problem.
• Use certified mail. Any responses to the IRS should be sent via certified mail. This will provide proof of your timely correspondence. Lost mail can lead to delays, penalties and additional interest on your tax bill.
• Don't assume it will go away. Until a definitive confirmation that the problem has been resolved is received, you need to assume the IRS still thinks you owe the money. If no correspondence confirming the correction is received, a written follow-up will be required.
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Each month, we will give you tips and useful information to help you protect your finances, begin planning on ways to save for your future, or how to begin preparing your taxes. Our goal is to help you get the information you need for a financially savvy today and tomorrow. So sign up for our monthly client newsletter today to stay up-to-date with news from our office and to receive special offers from our team.Our Latest Newsletter