Erock CPA Tax Tips – IRS Form 2441 – Child Care Credit

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Tax Tips from Stu Steinberg – CPA, National Speaker & Financial Advisor

“Celebrating 25 Years in the Business”

 Anyone who has ever had to pay for child care realizes the overwhelming cost.  The IRS shares a little break to us with this cost by allowing us a credit on IRS Form 2441.  This item is a credit and is a direct reduction in total tax.  The care must be provided by a qualified caregiver and the total credit is limited to $1200 for two or more kids.  Most states take the deduction as well so there is usually a little savings on the state end, in addition.  While this is not a huge credit, it still helps families struggling with the rising cost of child care.  With more and more families with two working spouses or single parents, it is not a surprise the cost has skyrocketed!

About Stu: With more than 25 years of experience as a credentialed tax professional, Stu Steinberg brings a broad depth of knowledge to his work. Stu founded Erock Tax to help provide tax strategies to individuals, families and small businesses. He uses his CPA expertise to help each client navigate their long-term debt and mortgage, gaining them the best deals and rates possible. Stu is passionate about empowering his clients through education about their tax health. He is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.

 

Erock CPA Tax Tips – Donating to Charity

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Tax Tips from Stu Steinberg – CPA, National Speaker & Financial Advisor

“Celebrating 25 Years in the Business”

Using the Schedule A of IRS form 1040, taxpayers are allowed to write-off cash and items donated to qualified charities.  The deduction is limited to 50% of Adjusted Gross Income and other items are subject to a 30% limit.

Donating non-cash items to charity has increased in recent years. Donating these items can clear out the clutter in your home without diminishing your cash on hand.  In fact, it would increase your cash as your tax bill will decrease from the additional tax deduction.  Donor Advised funds have also gained popularity, with the donor getting an immediate tax deduction for the donation while retaining the authority to determine how the money is donated from the fund over time.

For tax purposes, gifts to charity for over $250 have to be documented individually and the copy of the check needs to be included with the timely filed tax return.  Non-cash gifts over $5,000 generally need to be independently appraised and appraisers often get booked up as year-end approaches so please be aware of this time restriction when donating.  Non-cash gifts greater than $5,000 must be carefully detailed on IRS form 8283.  Be careful as this form has a higher potential of being audited.  IRS data shows that 60% of taxpayers do not comply properly with this part of the charitable law.

I have a client who recently hired a third party to help them analyze and appraise their artwork.  They will have to be careful when applying the deduction to their 2013 tax return.  If they donate the artwork and it is used by the donor organization, they get the fair market value of the donated item.  If they make the donation and the artwork is not used and is subsequently sold by the donee organization, the original owner of the artwork would get the lesser of the sales price or the fair market value of the art.

Donating appreciated investments to charity is a valuable money savings tool as well.  Many have portfolios or assets that have increased dramatically in value over the years.  Donors of these items or accounts get the full value of the deduction AND avoid paying taxes on the investment gain.  With the IRS, this is one of the best deals going!  Be careful with losing investments.  It is best to sell these first, thus harvesting the tax loss individually before donating to charity.

There are other complex trusts and investment vehicles that can be set up to donate to a charitable organization, so please explore these options with your advisor before making a hasty decision!

About Stu: With more than 25 years of experience as a credentialed tax professional, Stu Steinberg brings a broad depth of knowledge to his work. Stu founded Erock Tax to help provide tax strategies to individuals, families and small businesses. He uses his CPA expertise to help each client navigate their long-term debt and mortgage, gaining them the best deals and rates possible. Stu is passionate about empowering his clients through education about their tax health. He is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.

Erock CPA Tax Tips – IRS Form Schedule E Rental Income & Expense

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 Tax Tips from Stu Steinberg – CPA, National Speaker & Financial Advisor

“Celebrating 25 Years in the Business”

I have always said that there are two kinds of people, there are real estate investors, and everybody else!  Anyone who invests in real estate or has flow-through income from Corporations, Partnerships, or Trusts will use IRS form Schedule E to report their gains and losses.

On page one of schedule E, we report royalty and rental income as well as all expenses incurred while producing the real estate income.  Expenses include auto and travel to check on your property, materials and repairs, mortgage interest, taxes and utilities paid, as well as landscaping and snow removal, to name a few.  Depreciation is calculated as a write-off and is an extremely complicated part of the tax code so please be sure you amortize this expense properly.  There are also limits to the amount of loss you can take in the current year and this is called passive activity.  Be sure to consult your local tax advisor with help on this area of the tax return.

About Stu: With more than 25 years of experience as a credentialed tax professional, Stu Steinberg brings a broad depth of knowledge to his work. Stu founded Erock Tax to help provide tax strategies to individuals, families and small businesses. He uses his CPA expertise to help each client navigate their long-term debt and mortgage, gaining them the best deals and rates possible. Stu is passionate about empowering his clients through education about their tax health. He is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.

 

Erock CPA Tax Tips – Schedule D Capital Gains and “A Year and a Day”

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Tax Tips from Stu Steinberg – CPA, National Speaker & Financial Advisor

“Celebrating 25 Years in the Business”

 We use IRS form Schedule D to track capital gains, both long and short.  There is a big difference between long and short when it comes to taxes, thus the term a year and a day.  Here is how it works:  First, we report the transaction by listing the number of shares, the name of the investment, when it was bought and for how much, as well as, when it was sold and for how much.  A gain or a loss is computed.  If the gain is short term, meaning the investment was held less than 1 year,  it is taxed at the ordinary income rate, which could be as high as 39.6%, + the potential 3.8% ACA surtax bringing the total tax paid on the item to 43.4%.  Then the state has to get factored in!

However, if the asset is held to a “year and a day”, than far more favorable long term gains tax rates are used and the top tax rate would be 23.8% including the ACA tax.  The 20+% potential tax savings makes the “year and a day” planning very prominent in many taxpayers lives.

About Stu: With more than 25 years of experience as a credentialed tax professional, Stu Steinberg brings a broad depth of knowledge to his work. Stu founded Erock Tax to help provide tax strategies to individuals, families and small businesses. He uses his CPA expertise to help each client navigate their long-term debt and mortgage, gaining them the best deals and rates possible. Stu is passionate about empowering his clients through education about their tax health. He is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.

 

Erock CPA Tax Tips – IRS Form Schedule C – Profit or Loss from Business

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Tax Tips from Stu Steinberg – CPA, National Speaker & Financial Advisor

“Celebrating 25 Years in the Business”

 IRS form Schedule C is used for non-incorporated entrepreneurs to report their income and expenses.  It is a very detailed form and it is most important to consult with a trusted advisor who has experience with the self-employed individual or small business.  Here at Erock Tax we have done thousands of these returns over the years and can help you navigate the world of income and deductions.

Some of the key deductions on the form include advertising, car and truck expenses, legal and professional, office, meals and entertainment, telephone, and education expenses, if they are incurred to maintain your career, not to advance it.  These are just a few deductible items, and it is best to get set up to track your expenses as early in the calendar year as possible.  Budgeting is far too often overlooked by the small business entrepreneur, which can lead to more tax due come tax time!

About Stu: With more than 25 years of experience as a credentialed tax professional, Stu Steinberg brings a broad depth of knowledge to his work. Stu founded Erock Tax to help provide tax strategies to individuals, families and small businesses. He uses his CPA expertise to help each client navigate their long-term debt and mortgage, gaining them the best deals and rates possible. Stu is passionate about empowering his clients through education about their tax health. He is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.

 

Erock CPA Tax Tips – IRS Form Schedule B Interest & Dividends

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Tax Tips from Stu Steinberg – CPA, National Speaker & Financial Advisor

“Celebrating 25 Years in the Business”

 Schedule B is really one of the easiest forms of the whole bunch.  It includes interest and dividends earned on investments, i.e. unearned income.  Be sure to understand the difference between ordinary dividends and qualified dividends as the tax rate on the particular investment  can be affected.  New for 2013 returns:  This unearned income will also face an additional 3.8% tax if you are married and make more than $250,000 or you are single and make more than $200,000.  This is due to the Affordable Care Act.

 

 

About Stu: With more than 25 years of experience as a credentialed tax professional, Stu Steinberg brings a broad depth of knowledge to his work. Stu founded Erock Tax to help provide tax strategies to individuals, families and small businesses. He uses his CPA expertise to help each client navigate their long-term debt and mortgage, gaining them the best deals and rates possible. Stu is passionate about empowering his clients through education about their tax health. He is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.

 

Erock CPA Tax Tips – IRS Form Schedule A Itemized Deductions

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 Tax Tips from Stu Steinberg – CPA, National Speaker & Financial Advisor

“Celebrating 25 Years in the Business”

At the top of page two of Form 1040, we get to write-off our itemized deductions. This is Schedule A.  This is where we list our deductions to help minimize our tax.  Popular deductions include; mortgage interest and real estate taxes on our homes, gifts to charity, as well as, state, local, and excise taxes on our cars.  Also, many people claim work expenses that do not get reimbursed by their employer on Form 2106 which flows to the Schedule A.  Other deductions not as commonly seen include the medical deduction and casualty and theft loss write-off.

There is a lot going on with Schedule A. It is wise to seek competent advice with the complexities of the form.  There are limitations for medical expenses (7.5%), charity (50% or 30%), and unreimbursed work expenses (2%.)  Reach out to your trusted tax advisor to ensure you fill this form out and don’t miss any key tax saving items.

 

About Stu: With more than 25 years of experience as a credentialed tax professional, Stu Steinberg brings a broad depth of knowledge to his work. Stu founded Erock Tax to help provide tax strategies to individuals, families and small businesses. He uses his CPA expertise to help each client navigate their long-term debt and mortgage, gaining them the best deals and rates possible. Stu is passionate about empowering his clients through education about their tax health. He is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.


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