Tax Carnival Ecstasy – October 1, 2013

Good Lord, I'm sure that's Councillor Bill Smi...
Good Lord, I’m sure that’s Councillor Bill Smith from Melrose – unless my eyes deceive me (Photo credit: Ninian Reid)

Welcome to the October 1, 2013 edition of Tax Carnival Ecstasy. In this edition we start with an article from Matt Becker on the deductability of mortgage interest and why it’s not the great tax deal everyone thinks. Bill Smith reports on TurboTax and eHealth working together and the IRS Fresh Start Program. Laura Anderson has some Nanny Tax Myths that you should know about. Hope you enjoy all the articles, bookmark, share, tweet and come back soon.

deductions

Matt Becker presents Is the Mortgage Interest Deduction For Real? posted at Mom and Dad Money, saying, “When people talk about the financial benefits of home ownership, one of the big points they typically make is that the interest paid on the mortgage is deductible. This is only semi-true and in any event is not really the big win that many people claim it is. So today I’d like to run through the reasons why the mortgage interest deduction is not always all it’s cracked up to be.”

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filing

Bill Smith presents TurboTax Is Integrating With EHealth posted at 2013 Taxes, saying, “eHealth, the United States’ predominant private Internet health insurance exchange, has announced that it will enter into a partnership with Intuit Inc..”

retirement

John Schmoll presents Should You Pay Off Debt or Invest in the Stock Market First? posted at Frugal Rules, saying, “There can be a fine balance between paying off debt or investing in the stock market first. The truth is that it’s a personal decision and one that will aid your wealth building, debt reduction and saving for retirement at the same time.”

John Schmoll presents When It Comes To Investing, Be The One Who Dives In Head First posted at Frugal Rules, saying, “Many allow fear to hold them back when it comes to investing in the stock market. However, if you give yourself some practical lessons you can put yourself in better standing to build a retirement portfolio and begin to grow your wealth.”

tax law

Bill Smith presents Tax Help 101: Casualty, Disaster, And Theft Losses posted at 2014 Taxes, saying, “Financial losses incurred because of disasters, casualties, or theft may be tax-deductible.”

taxes

Laura Anderson presents Expert Insights: Nanny Tax Myths with Guy Maddalone of GTM Payroll Services, Inc. posted at eNannySource, saying, “When it comes to employing a nanny, it’s important to know what’s true and false. Guy Maddalone, founder and president of GTM Payroll Services, Inc. and household payroll and tax expert, provides some important insight that can help separate fact from fiction.”

Bill Smith presents IRS Fresh Start Program posted at 2012 Taxes – Free Tax Filing Options, saying, “There is a new system called the IRS Fresh Start Program which aims to make it easier for people to pay back taxes and avoid a lien coming against them. There are three major parts to the IRS program.”

tips

Bill Smith presents Guidance For Personal Finance That Can Save These Days posted at 2012 Tax – Free Tax Filing Options, saying, “The government has become a popular source of security but real financial security is found at home when you reduce debt and have a savings.”

Bill Smith presents Free SCORE Tax Tips posted at 2010 Tax, saying, “Having your own small business can be a rewarding experience. There are many aspects that can be difficult to accomplish on your own though.”

That concludes this edition.  Submit your blog article to the next edition of tax carnival ecstasy using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Jackson Hewitt’s Tax Advice For Recent College Graduates

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Jackson Hewitt’s Tax Advice For Recent College Graduates

Jackson Hewitt operates around the country and offers various tax services for taxpayers. With that in mind, millions of people file their state and federal income returns annually. This company helps many of those very individuals on a regular basis while competing with TurboTax 2013. Recently, Jackson Hewitt released its biggest tax tips for college graduates. Recent graduates often make some big mistakes on their returns that are more than avoidable.

Jackson Hewitt Tax Service
Jackson Hewitt Tax Service (Photo credit: kenteegardin)

For instance, most students can deduct their student loan interest on their return. Only interest paid from a qualifying loan counts, though, and the maximum deduction is $2,500. Most college students are claimed as dependents as they attend school. However, a graduate should claim themselves independent afterwards to maximize their tax benefits. Someone that is considered independent for tax purposes can claim many more deductions than someone considered a dependent.

Jackson Hewitt reminds recent graduates of other tax issues, too. Thousands of students receive scholarships, which are sometimes taxable, depending upon the circumstances. Typically, funds paid directly to a student are completely taxable. On the other hand, graduates starting a new job should check out their withholding. Higher income means more taxes must be paid during the year. Nobody wants to find that they owe money to the government.

Filing taxes during college is often different than doing so after graduation. Of course, most graduates see some big changes in the coming years. There is no reason a person should fail to take advantage of the tax advice that’s available. The right information can save someone thousands of dollars in taxes per year. Plus, most people don’t understand the tax system very well, and this advice always helps.

Millions of people will use Jackson Hewitt or TurboTax 2013 to file their taxes this year. Unfortunately, the deadline is fast approaching, and late filing can cost a person greatly. It’s important to take a look at one’s tax situation and take available deductions or breaks. Too many people fail to do so and pay the costs, especially college graduates. In the end, taxes come every year, and there are plenty of ways to minimize the burden.

Personal Tax Planning

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A lot of money is “lost” through taxes, and personal tax planning ensures that a person gets the most out of their finances while paying less tax. At the end of the day one will be sure of saving up quite some amount of money and hence securing their finances.  There are ways that one can plan their finances in order for them to minimize the amount of taxes that they are to pay. There are a few ways in which one can achieve this and they include the
reduction of one’s income, increasing deductions and making use of tax credits.

The reduction of income

One of the most important elements that will determine the taxes on one’s income is the Adjusted Gross income. This element plays a very important role in finance. One needs to realize that the higher one gets in terms of their income, the higher the tax they are to pay. With AGI it simply means that you need to add up all your income and subtract any
adjustments. The examples of the adjustments made to your income include making contributions towards retirement plans including the 401(k) and other similar plans. The adjustments will ensure that your income is lower hence lowering
your tax.

Increasing tax deductions

The best way to ensure that a person is increasing ones taxable deductions is by itemizing the deductions. These include the state taxes, mortgage interest and gifts to charity. Once you keep track of the itemized deductions it is important to compare the expenses to the standardized deduction. This will largely depend on the number of dependents one has. The more the dependents the higher the standard reduction one is expected to have. This is one of the strategies that used in reducing the amount of income that is subject to being taxed.

Tax Credits

Tax credits can work to reduce one’s taxes. Some of the people illegible for tax credits include college students who get tax credit for their first two years and for those that commit to taking a lifetime tax credit. The course one takes does not really matter. One can also reduce taxes by avoiding making withdrawals from their retirement plan. This will
ensure that the tax bill is lowered on your finances.

One can also increase their withholding which will keep of any owing. Through this one is to get a larger refund as compared to what would have been taken from their paycheck during the year.

Author’s Bio: Val Anne is an in-house writer from Franklin Debt Relief, a company specializing in programs for people with high credit card debt.

When Are Taxes Due? And Other Answers to Your Tax Questions

When Are 2011 Taxes Due? And Other Answers to Your Tax Questions

Whether you file your taxes on your own or with the help of a tax professional, the entire process can leave you with questions. From trying to figure out the tax code changes between this year and the last to trying to make sense of the various deductions you can take, filing taxes is rarely ever straightforward.

Here are the answers to some of the most common questions regarding taxes:

1. When are 2011 taxes due?

While April 15 is the classic due date, you must have your taxes filed by April 17 in 2012. Because the 15th falls on a Sunday and the 16th is a holiday in the District of Columbia, you get an extra couple of days to get those tax papers to the IRS.

2. Where should I mail my tax return in 2012?

The addresses for the IRS facilities to which you mail a paper return have changed. Be sure to look over your form instructions to find the proper mailing address. Not doing so could lead to penalties for late filing due to returned mail.

3. What amount do I claim for standard deductions and exemptions?

Good news! The amount for both of these categories has actually increased this year. If you do not itemize your deductions, then your standard deduction is higher. Also, instead of only being able to deduct $50 per exemption, you will be able to deduct $3,700 for each one on 2011 taxes.

4. Can I still claim the first-time home buyers tax credit on my return?

This credit is not available anymore. However, if you are a member of the military or if you work in the intelligence sector, you may still be able to claim it.

5. Can I still claim the alternative motor vehicle credit?

New fuel cell motor vehicles are still eligible for the credit in 2011.

6. What is the limit on age for claiming a dependent?

If you are claiming your child as a dependent, you can only claim them if they are under the age of 19, under the age of 24 and a full-time student for at least five months of the tax year, or completely disabled at any age. You can also claim certain qualifying relatives if they meet the proper criteria.

7. Can I direct deposit my IRS refund into multiple accounts?

Yes, you may split your refund however you like and deposit it into up to three different accounts.

8. How do you claim head of household status for tax purposes?

If you were unmarried and the primary caregiver of a child that lived with you for over six months of the year, you can file as Head of Household. To qualify, you don’t need to claim the child as a dependent.

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Tax code and rules change from year to year. If you ever have any doubts about any section of your tax forms, you should contact a tax consultant or the IRS to clarify. Making mistakes on your taxes can result in audits and fines.

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RG Brenner wants to remind you that filing your taxes properly and claiming deductions you qualify for are important for minimizing your taxes. If you still have questions about the 2011 taxes or if you need assistance in filing your taxes, visit www.rgbrenner.com.

5 Critical Accounting Tips for Freelancers

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Freelancing has its privileges. It’s nice to be able to pick and choose your work, set your own hours, work from wherever you want to, and call yourself your own boss. However, along with all of those awesome pluses come a set of responsibilities that are unique to the self employed. One such area that seems to stump freelancers more often than not is accounting. Unfortunately, accounting mistakes can be very costly; therefore, freelancers must make special considerations throughout the year to ensure there are no mistakes come tax time. Here are five critical accounting tips for freelancers:

Automated invoicing. Sure, creating your own custom spreadsheet and doing your invoicing by hand is cheap and easy . . . but it also tends to turn into a mess when your freelancing business takes off. Invest in an invoicing software program that automates the process, or do your invoicing via an online accounting interface like freshbooks.com.

Estimated taxes. Pay your estimated taxes on time throughout the year, rather than wait for the big bill come tax season. Chances are those smaller payments will be much easier to make than one huge lump sum amount, so think ahead by paying now.

Record keeping. Buy a simple filing cabinet and organize all of your records. This includes contracts, invoices, and all important receipts. You will need them to itemize your tax forms at the end of the year and when they are all over the place, you are bound to leave some out. This could ultimately cost you, so it’s better to get into good record keeping habits now.

Don’t forget the small stuff. Many freelancers forget some of the simplest tax write offs associated with being a freelancer. For example, it is not unusual to leave things like office supplies and PayPal fees off the deductibles list, and those things can really add up.

Profit and loss statements. Make it a point to document all of your income and expenses as you go, and to use your accounting software to generate profit and loss statements on a regular basis. That way you are not in the dark when it comes to your finances and taxes.

As you can see, handling your accounting the right way is not that complicated. It is actually just a matter of forming some good habits and being diligent about the details. Follow these five simple tips throughout the year to make tracking your freelance income and filing your taxes as painless as possible.

About the Author: Nichol Linebrink is a freelance business consultant specializing in communications. She helps small businesses locate VOIP service provider contacts and other critical services so that they can keep themselves running with minimal overhead.