Tax Breaks for the Students in Your Family

Five words or less(NewsUSA) – College costs may have entered nosebleed territory, but at least Uncle Sam is there waving a hanky in the form of juicy tax credits and deductions for those smart enough to claim them.
If you’ve been footing those education bills, either for yourself or your child, the latest College Board statistics shouldn’t be a shocker: In-state tuition and fees at four-year public colleges rose an average of 8.3 percent last year — to $8,244 — even as the economy sputtered.
“That’s a terrible upfront burden for many families,” says Elaine Smith, master tax advisor at H&R Block (www.hrblock.com), the giant tax preparation firm. “But at least there are several breaks built into the tax code that could even mean the difference between whether you owe taxes or are due a refund.”
What breaks? Read on:
* American Opportunity Tax Credit. This is the Gold Standard for those who qualify. Meaning, it’s a dollar-for-dollar tax offset of up to $2,500, per student year, for up to four years of undergraduate education. “One of the best things about it is that up to $1,000 of the credit is ‘refundable,'” notes Smith. “So you could wind up getting a refund for that amount if no taxes are otherwise due.”
Biggest cautions: You must be enrolled at least half-time in a degree program to claim it, and — like all these breaks — the benefit starts to phase out once you reach a certain adjusted gross income (AGI).
* Lifetime Learning Credit. Eligibility standards for this one are broader, even if it’s less generous than the AOTC. Pursuers of both college and graduate degrees — as well as those taking classes to improve job skills — potentially stand to benefit from a tax credit up to $2,000. Biggest caution: The credit can only be claimed once per tax return, regardless of the number of students taking courses.
* Student-Loan Interest Deduction. If you’re self-financing, congrats — and skip this one. If not, we’re talking up to $2,500 per year. Biggest caution: Only debt from graduate and undergraduate programs qualifies.
* Tuition and Fees Deduction. There’s a built-in caution to this $4,000 deduction: You can’t claim it and the Lifetime Learning Credit for the same student, so do the math to see which works best.
Of course, if the “M” word — math — scares you as much as the looming April 17 filing deadline, consult a professional like those at H&R Block, which offers in-person services at its retail offices nationwide as well as the only face-to-face online preparation through Block LiveSM.
One last tip: For those wondering whether scholarship income awarded for room and board is tax-exempt, the answer, alas, is no.

It’s Tax Time. Are You Taking All the Deductions Allowed?

Five words or less(NewsUSA) – Here’s a scary number to keep in mind if you’re just getting your tax receipts together: $1 billion.
No, it’s not the amount that Warren Buffet’s secretary — let alone Buffet personally — paid the IRS in her lifetime. It’s how much taxpayers approximately wind up forfeiting each year to the government because of self-inflicted tax errors like: failing to claim tax credits and deductions legally due them; choosing the wrong filing status; and not bothering to send in a return at all.
Well, guess what? A slew of recent changes in the tax law won’t make things any easier this year.
“At a time when taxpayers are hurting, it really doesn’t make sense to leave money on the table,” says Elaine Smith, master tax advisor at H&R Block, the giant tax preparation firm (www.hrblock.com).
Here are some things — good and bad — to watch out for:
* Casualty losses. Hurricane Irene. Midwest tornadoes. Texas wildfires. Mother Nature went a little nutty last year, and — if the president declared your area a disaster — you could be able to claim your loss as an itemized deduction on your 2011 return or on an amended 2010 one.
* Reduction in the Energy Savings Home Improvement Credit. At its height, this was a 30-percent credit on the cost of high-efficiency windows, furnaces, central AC and the like. It’s now 10 percent. Plus, the maximum lifetime credit went from $1,500 to $500. “That means if you spent a total of $5,000 on IRS-approved upgrades in 2011,” says Smith, “you can claim a $500 credit. Unless, that is, you’d already maxed out in prior years.”
* Expiration of the tax credit for hybrid cars. If you bought a Prius last year, you did so without the feds’ help. However, the green cars du jour — i.e., the electric-drive Chevy Volt and Nissan Leaf — will score you a $7,500 credit. And there are goodies for things like conversion kits, too.
* New cost-basis reporting requirements. Apparently, some of you were inflating the price you paid for stocks to reduce the taxes owed on capital gains. Or at least the government fears that was happening. So look out for a mandatory statement from your broker reporting your “cost basis” for stocks and securities held in taxable accounts — as opposed to 401(k)s and IRAs — that you sold in 2011.
Of course, with the April 17 filing deadline approaching, those worried about becoming a member of the $1 Billion Club might want to consult a professional like those at H&R Block, which offers in-person services at its retail offices nationwide as well as the only face-to-face online preparation through Block LiveSM.

Avoid Tax Season Pitfalls For Your Small Business

Five words or less(NewsUSA) – Tax season tends to be people’s least favorite time of the year, which is only compounded for small businesses. Don’t live in fear under the ever-nearing tax thundercloud, make sure your business is prepared to meet the daunting season. Here are five basic rules to keep your business ahead of tax season.
1. Regularly update accounting records. Knowing the intricacies of your company’s financial situation throughout the year makes tax season much less intimidating. Plus, if all records are up-to-date and exact, your accountant has more time to spend on finding ways to save the business money instead of organizing information.
2. Triple check your tax bracket. Marginal tax rate analyses help guarantee that your small business isn’t needlessly pushed into a higher tax bracket. This is especially beneficial if your business is teetering on the edge. Recognize income when your tax bracket is lower; pay deductible expenses when the bracket is higher.
3. Take inventory of supplies, equipment and other potential write-offs. Equipment might be damaged or too outdated to maintain productivity. Replacing office supplies and obsolete assets before the new year gives the company added deductions. For costly technology, confer with your accountant to see whether an immediate or depreciable write-off is preferable. Financial planners like On Call Accountants help maximize deductions and increase expenses to prevent owing exorbitant fees. Learn more about possible deductions at www.oncallaccountants.com.
4. Contribute to a retirement plan. If you haven’t set up a retirement plan yet, do it before the year-end to reduce this year’s income. Qualified retirement plans afford tax deductions for all contributions. Find an appropriate plan for your business, and explore contribution limits. A retirement savings opportunity will also garner loyalty among employees.
5. Look into business tax credits. Small businesses may be eligible for numerous tax credits, as listed on the IRS website. Examples of possible credits are Low-Income Housing, Credit for Increasing Research Activities and Disabled Access Credit.

Navigate Tax Season With These Tips

Tax season tends to be people’s least favorite time of the year, which is only compounded for small businesses. Don’t live in fear under the ever-nearing tax thundercloud, make sure your business is prepared to meet the daunting season. Here are five basic rules to keep your business ahead of taxes season.

1. Regularly update accounting records. Knowing the intricacies of your company’s financial situation throughout the year makes tax season much less intimidating. Plus, if all records are up-to-date and exact, your accountant has more time to spend on finding ways to save the business money instead of organizing information.

Earn College Credit for What You Already Know

Despite signs that the national economy is getting back on its feet, Americans who lost their jobs to the recession are having a harder time getting back on theirs. Jobs have changed—a lot—and along with them the skills and knowledge required to enter and advance in the workforce.

In the new economy, more jobs require the skills and knowledge obtained in postsecondary education. But for adults lacking degrees, the traditional structure and organization of higher education often pose significant roadblocks to success.

Control Your Spending: The Smart Money’s on Prepaid Debit Cards

div img class=”category-img” src=”http://ftper.newsusa.com/Thumbnail/PrepaidDebit.jpg” alt=”Five words or less” width=”180″ //divdiv class=”category-listcontent”div class=”category-body” id=”ArticleBody” style=”display: block” (a href=”http://www.newsusa.com”NewsUSA/a) – The current economy has made credit cards more difficult to acquire, much less pay off. But those who don’t qualify for credit cards or who …/div/div

New Tax Perks Could Help Businesses Save Thousands

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<p>(<a href=NewsUSA) – New tax laws could save businesses thousands on their 2010 taxes. The tax breaks are meant to encourage businesses to add employees, purchase equipment and provide employee healthcare.

The Hiring Incentives to Restore Employment (HIRE) Act included a payroll tax exemption for hiring and keeping new workers. Under the new law, businesses can exempt the 6.2 percent Social Security payroll tax for wages paid between March 18, 2010 and December 31, 2010, for each new employee meeting all the following criteria:

* Hired after February 3, 2010, and before January 1, 2011

* Either unemployed during the 60 days before being hired or worked less than 40 hours in total during that 60-day period

* Not a family member or other relative

The exemption does not apply to wages paid to an employee hired to replace an existing worker, unless the existing worker left voluntarily or was terminated for cause.

Employers are required to keep either Form W-11 or an affidavit signed by the employee (as proof they meet the criteria) in their records. The exemption is claimed on quarterly Form 941.

Businesses retaining the employees for 52 consecutive weeks without significantly decreasing wages in the second half of the year can claim a new hire retention credit of up to $1,000 per worker on 2011 returns.

The HIRE Act also extended the Section 179 first-year expensing cap on depreciable business property for 2010. The limit remains at $250,000 instead of decreasing to $125,000. The $800,000 cost-of-equipment limit was also extended for 2010.

The Patient Protection and Affordable Care Act, signed into law on March 23, 2010, allows businesses and tax-exempt organizations to earn a tax credit for providing or maintaining employee health insurance.

Jessi Dolmage, spokeswoman for 2nd Story Software, makers of TaxACT, explained that businesses with 10 or fewer full-time equivalent employees with an average annual salary of $25,000 or less can earn the maximum credit of 35 percent, while tax-exempt organizations can receive 25 percent. Employers must pay at least half the cost of single coverage for employees. The credit decreases as the number of qualifying employees and average salary increase, phasing out at 25 full-time equivalent employees with an average salary of $50,000 or more. Family members do not qualify.

In 2014, the maximum credit amount will increase to 50 percent of the premiums paid for businesses and 35 percent for tax-exempt organizations.

Businesses can claim the credit under the general business credit, and the IRS will send instructions to tax-exempt organizations.

More information about the HIRE Act, health care credit and other tax breaks for businesses can be found at www.irs.gov.

TaxACT Business Editions walk you step-by-step through credits and deductions to minimize your tax liability. Answer simple questions, and TaxACT does the calculations and completes the forms for you. Then use TaxACT Free Federal Edition to prepare, print and e-file your personal tax return free.

Visit www.taxact.com to learn more.

Save on Your Taxes by Starting Your 2010 Return Early

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<p>(<a href=NewsUSA) – Some major tax breaks included in the American Recovery and Reinvestment Act (ARRA) and the Worker, Homeownership and Business Assistance Act passed last year are expiring for 2010, including the First-time Homebuyer credit, new vehicle credit and unemployment deduction and government retiree credit. However, many credits will again be available for 2010 federal returns -; the Making Work Pay, American Opportunity, additional child, expanded earned income and home energy improvement credits are among them.

“Certain credits and deductions require advanced planning in order to get the maximum tax benefit. Although it may seem really early to start tax planning for next year, it’s a smart move that could save you thousands.,” explains Jessi Dolmage, spokeswoman for Second Story Software, the makers of TaxACT.

A few easy steps will help you avoid missing out on credits and deductions, and minimize your tax liability.

First, familiarize yourself with both acts by visiting www.IRS.gov. An entire section of the website is dedicated to the ARRA, and additional information and a Making Work Pay Calculator are available at www.TaxACT.com/recovery-act.

Second, get organized. Put all tax records in one secure place, including receipts and statements related to:

* Child and dependent care

* College expenses

* Medical expenses

* Vehicle taxes

* Real estate taxes and mortgage interest

* Charitable contributions

* Business or employee expenses

* Investments and retirement contributions

* Energy-efficiency property expenses

* Expenses related to job searches

Sort documents by topic to easily access the information when working on related deductions and credits. In addition, include a copy of your 2009 tax return for reference and comparison. If you plan to e-file, you’ll need it for your 2009 Adjusted Gross Income or Self-select Personal Identification Number.

Third, start your 2010 federal tax return in October and create your year-end tax plan with the preview versions of TaxACT. Starting your federal return early will save time when you’re ready to file, reduce errors (because you won’t be rushing), and find all your deductions and credits.

Dolmage explains, “Whether you typically do your own taxes or have never done them, a solution like TaxACT Online Free Federal Edition will show you exactly how these tax law changes will affect your 2010 return. Choose a step-by-step interview or complete the IRS forms yourself, at your own pace. Either way, TaxACT will help you capitalize on the acts and estimate your refund amount or taxes owed.”

To start your free 2010 federal tax return or for more information about TaxACT, visit www.TaxACT.com.

Time and Money Saving Tips for Your 2010 Tax Return

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<p>(<a href=NewsUSA) – The American Recovery and Reinvestment Act of 2009 will still benefit millions of workers, families and college students on their 2010 federal tax returns.

The Making Work Pay Credit is equal to 6.2 percent of your earned income, up to $400 for individuals and $800 for joint filers in 2010. It starts phasing out at $75,000 for individuals and $150,000 for joint filers. Like last year, the credit is already being distributed in paychecks through increased federal withholding. (If you don’t withhold federal taxes, you’ll receive the credit when you file your 2010 return.) Even though you receive this credit in each paycheck, you’ll generally still need to claim the credit on your 2010 tax return. The credit on your federal return makes up for the reduced withholding throughout the year.

The credit should be figured using Schedule M and recorded on Form 1040, 1040A or 1040EZ.

Certain energy-efficient home improvements are worth up to $1,500 through the Nonbusiness Energy Property Credit and Residential Energy Efficient Property Credit. Then add this sentence: The $1,500 limit is the maximum amount that can be claimed for both 2009 and 2010 combined, and you must claim the credit in the year that the improvements were made. Both credits should be claimed on Form 5695.

The HOPE credit is now called the American Opportunity Credit and is worth up to $2,500 per student for tuition, related fees and required course materials in 2010. It phases out at a modified adjusted gross income of $80,000 for individuals and $160,000 for joint filers.

Form 8863 must be filed to claim this credit.

Jessi Dolmage, spokeswoman for 2nd Story Software, Inc., the makers of TaxACT, recommends these steps:

1. Using the preview versions of TaxACT made available in early October for year-end tax planning and to get a head start on your 2010 federal return.

2. Reviewing your withholding. The Making Work Pay Credit is being distributed through decreased federal withholding, so having too little tax withheld may result in a smaller refund or more taxes owed.

3. Learning more about the ARRA at www.IRS.gov/recovery and www.TaxACT.com/recovery-act.

Your SSN Might Not Be So Secret, Santa

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<p>(<a href=NewsUSA) – Holiday shopping means flashing plastic — you put gifts on credit cards with nary a thought. But identity thieves also enjoy the holiday season, for it presents plenty of opportunities to nab credit card and social security numbers.

Identity thieves obtain personal information through several different methods, including shoulder-surfing in lines, skimming devices, dumpster diving and hacking into online retail sites. What can shoppers do to protect themselves? LifeLock, a company that helps protect its members from identity theft, supplies the following tips:

* Be aware that your information is probably already out there via data losses or on public Web sites, and understand the proper procedures if someone begins using the information.

* Don’t give out personal information via email or on social networking Web sites.

* Make sure your computer is updated and protected from viruses and malware. Also refrain from using any peer-to-peer software. These programs could provide openings for criminals to steal documents from your computer without you knowing.

* Consider using one-time-use credit cards, paying with cash or setting up a special holiday shopping bank account that isn’t linked to your everyday accounts.

* Pay attention to who is around you and what is done with your information when you apply for store credit cards.

* Shop online only on secure Web sites, and never send personal information to sellers on eBay or other sites directly. Use a service like PayPal.

* Consider your defense options. With reports of identity theft and fraud at an all-time high, now is a great time to determine whether there is a defense system that would work for you. Consider all the options, and find a service that can search for your information and provide the the means to keep others from using it. And since nothing can stop all forms of identity theft or fraud, it’s important to find a service that can provide the peace of mind you would want if something happens.

LifeLock recently introduced its LifeLock Identity Alert system to help consumers protect themselves during the holidays. LifeLock will alert members by e-mail, postal mail or phone when it detects personal information being used to apply for many credit cards, wireless services, retail credit, utilities, check orders or reorders, mortgage loans, auto loans and noncredit-related payday loans.

For more information, visit www.lifelock.com.