At Ballard & Company, Ltd. CPAs, we guide our clients through a full range of tax planning and preparation decisions for families and individuals with strategies that minimize your tax liabilities, maximize your cash flow and keep you on track to achieve your financial goals. Our expertise, experience, analysis and thorough research allow us to optimize financial opportunities to be found in existing as well as recently altered tax laws. We are knowledgeable and up to date on the tax laws and can make sense of your receipts, bills and notices.
Tax Incentives for Higher Education
The tax code provides a variety of tax incentives for families who are paying higher education costs or are repaying student loans. You may be able to claim an American Opportunity Credit (formerly called the Hope Credit) or Lifetime Learning Credit for the qualified tuition and related expenses of the students in your family (i.e., you, your spouse, or dependent) who are enrolled in eligible educational institutions. Different rules apply to each credit and the ability to claim the credit phases out at higher income levels.
You may be able to deduct interest you pay on a qualified student loan. The deduction is claimed as an adjustment to income, so you do not have to itemize your deductions on Schedule A Form 1040. However, this deduction is also phased out at higher income levels.
Forgiven debt is typically treated as taxable income, but if your student loan is forgiven, you may not have to include any amount in income.
Check Withholding to Avoid a Tax Surprise
Whether or not you owed taxes or received a refund last year, check your tax withholding to avoid having too little tax withheld and facing an unexpected tax bill or penalty at tax time next year. On the other hand, if you have too much withheld and receive a large refund, you will have lost out on having the money in your pocket throughout the year. Changing jobs, getting married or divorced, buying a home or having children can all result in changes in your tax calculations.
The IRS withholding calculator on IRS.gov can help compute the proper tax withholding. The worksheets in Publication 505, Tax Withholding and Estimated Tax, can also be used to do the calculation. If the result suggests an adjustment is necessary, you can submit a new W-4, Withholding Allowance Certificate, to your employer.
5 Tips For Early Preparation
Earlier is better when it comes to working on your taxes. The IRS encourages everyone to get a head start on tax preparation. Not only do you avoid the last-minute rush, early filers also get a faster refund. There are five easy ways to get a good jump on your taxes long before the April 15 deadline rolls around:
- Gather your records in advance. Make sure you have all the records you need, including W-2s and 1099s. Don't forget to save a copy for your files.
- Get the right forms. They're available around the clock on IRS.gov in the Forms and Publications section.
- Take your time. Don't forget to leave room for a coffee break when filling out your tax return. Rushing can mean making a mistake — and that can be expensive!
- Double-check your math and Social Security number. These are among the most common errors on tax returns. Taking care on these reduces your chances of hearing from the IRS.
- Get the fastest refund. When you file early, you get your refund faster. Using e-filing with direct deposit gets you a refund in half the time as paper filing.
Amended Returns
Oops! You've discovered an error after your tax return has been filed. What should you do? You may need to amend your return.
Ayuda en Espanol
If you need federal tax information, the IRS provides free Spanish language products and services. Pages on IRS.gov, tax topics, refund information, tax publications and toll-free telephone assistance are all available in the Spanish-language.
Filing an Extension
If you can't meet the April 15 deadline to file your tax return, you can get an automatic six-month extension of time to file from the IRS. The extension will give you extra time to get the paperwork into the IRS, but it does not extend the time you have to pay any tax due. You will owe interest on any amounts not paid by the April deadline, plus a late payment penalty if you have paid less than 90 percent of your total tax by that date.
Car Donations
The IRS reminds taxpayers that specific rules apply for taking a tax deduction for donating cars to charities.
Charitable Contributions
Your donations can add up to a nice tax deduction if you itemize deductions on IRS Form 1040, Schedule A.
Earned Income Tax Credit for Certain Workers
Millions of Americans forgo critical tax relief each year by failing to claim the Earned Income Tax Credit (EITC), a federal tax credit for individuals who work but do not earn high incomes. Taxpayers who qualify and claim the credit could pay less federal tax, pay no tax or even get a tax refund.
Refinancing Your Home
Taxpayers who refinanced their homes may be eligible to deduct some costs associated with their loans.
Selling Your Home
If you sold your main home, you may be able to exclude up to $250,000 of gain ($500,000 for married taxpayers filing jointly) from your federal tax return.
Deductible Taxes
Did you know that you may be able to deduct certain taxes on your federal income tax return? The IRS says you can if you file Form 1040 and itemize deductions on Schedule A. Deductions decrease the amount of income subject to taxation.
Gift Giving
If you gave any one person gifts valued at more than the gift tax annual exclusion amount, it is necessary to report the total gift to the Internal Revenue Service. You may even have to pay tax on the gift.
Marriage or Divorce
Newlyweds and the recently divorced should make sure that names on their tax returns match those registered with the Social Security Administration (SSA). A mismatch between a name on the tax return and a Social Security number (SSN) could unexpectedly increase a tax bill or reduce the size of any refund.
Filing Deadline and Payment Options
If you're trying to beat the tax deadline, there are several options for last-minute help. If you need a form or publication, you can download copies from the IRS Forms page under Tax Tools on our website. If you find you need more time to finish your return, you can get a six month extension of time to file using Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. And if you have trouble paying your tax bill, the IRS has several payment options available.
Refund, Where's My Refund?
Are you expecting a tax refund from the Internal Revenue Service this year? If you file a complete and accurate paper tax return, your refund should be issued in about six to eight weeks from the date IRS receives your return. If you file your return electronically, your refund should be issued in about half the time it would take if you filed a paper return even faster when you choose direct deposit.
Tips and Taxes
Do you work at a hair salon, barber shop, casino, golf course, hotel or restaurant or drive a taxicab? The tip income you receive as an employee from those services is taxable income, advises the IRS.