12 Tax Tips of Christmas
December 12, 2014
On the 1st day of Christmas my tax man told to me.............If you plan on using the Federal Exchanges for health insurance, make sure that you enroll by December 15. If not your policy may not be in force on January 1 and you could be without insurance for a period of time in 2015. Might not be the best way to start the year off. If you still need to shop for insurance click on the following link: drakehealth.com/site/svc/egateway
On the 2nd day of Christmas my tax man told to me...........Consider contributing to a traditional IRA for 2014. You actually have until April 15, 2015 to make that contribution and have it be deducted on your tax return for 2014! You may contribute up to $5500 in 2014 and if you are age 50 or older you can contribute up to $6500. Be cautious of income limitations. Please call us if you have questions.
On the 3rd day of Christmas my tax man told to me............If you are looking for an extra deduction on your taxes for 2014, try paying your property tax bill that is due in February before December 31st of 2014. You can deduct the taxes when you pay them, not neccessarily when they are due. Most of us must be able to itemize to take advantage of this strategy so feel free to give us a call to see if you might qualify.
On the 4th day of Christmas my tax man told to me............Many of the health plans being utilized now a days are considered HIGH DEDUCTIBLE PLANS. This means you are able to contribute TAX DEDUCTIBLE DOLLARS to an HSA (Health Savings Account) much like an IRA! If you are paying medical expenses out of your own pocket anyways, you may as well convert them over to a 100% tax deduction via an HSA. Limits may apply so give our office a call for details.
On the 5th day of Christmas my tax man told to me............Keep any and all receipts for any donations that you made to a charitable organization for the year. Even if the donation was for $10, you still must have a receipt. The IRS will dissallow any charitable deductions claimed if you cannot provide a proper receipt from the charitable organization. If you give clothes or other household items to goodwill or salvation army, make sure you get a receipt from them. I would also highly recommend that you keep a list of each item that was donated as well as a description of each item. I would also take pictures of the items you are donating for further proof if the IRS wishes to ask questions.
On the 6th day of Christmas my tax man told to me............You are allowed to give anyone you choose up to $14,000 each year without having to file a gift tax return. If you give anymore than that to a single individual in a single tax year, you will have to file the gift tax return and possibly pay any taxes due. The receiver of the gift will not owe any taxes either way on that money.
On the 7th day of Christmas my tax man told to me............If you purchased Health Insurance through the Federal Exchange and received a subsbsidy in 2014, make sure you bring us your form 1095-A. If the numbers on the 1095-A do not match up to what is put into your tax return, your return will be DELAYED for several months while the IRS sends you a letter asking you to fix the problem. So a rule of thumb begining January 1st, do not even attempt to file your return without having that 1095-A in your hands!
On the 8th day of Christmas my tax man told to me............If you are planning on drawing social security soon, watch out for additional taxes that may be due when you file. Federal can and will tax up to 85% of your social security benefits each year depending on the amount of you and/or your spouses other income. Here is the basic formula for taxability: 1/2 of your Social Security benefits + All other income. If filing jointly and the result goes over $34,000 then social security will start to be taxed. For Single filers the result cannot go over $25,000. It can be complicated so please feel free to give us a call with any questions. Plan ahead so your not surprised.
On the 9th day of Christmas my tax man told to me............Proper recordkeeping is essential for any small business. Mileage is the deduction that is most scrutinized bythe IRS during an audit. If you don't have a proper mileage log, the IRS will disallow your entire mileage deduction which could cost you thousands in taxes and penalties. Don't make that mistake. A proper mileage log will track the following of each trip: Date, Starting location, Ending location, Trip Mileage and Business Purpose. If you track your mileage this way, the IRS will be happy and that means you will be too.
On the 10th day of Christmas my tax man told to me............The Senate has finally passed the extenders bill for 2014. This bill extends 55 tax breaks that had expired at the end of 2013. One of the largest items to be extended was the Section 179 expensing limits. Up until 2013 you could purchase up to $500,000 of equipment (new or used) and deduct 100% of the cost in year 1! This rule expired on January 1st of 2014 and made the new limit only $25,000 :(. However, with Congresses recent but late action we are again able to expense up to $500,000 of equipment in year #1! As long as the equipment is bought before December 31st, you can claim the full amount of depreciation up to $500k on your taxes for 2014. Hooray!!!!
On the 11th day of Christmas my tax man told to me...........Tax credits for attending college can prove to be a very nice subsidy. The American Opportunity Tax Credit could give you a tax credit of up to $2,500! And all you need to do is have tuition expenses at an accredited college in the amount of $4,000. Thats it. This credit could pay for a major portion of attending classes at a community college. The credit is based on tuition, fees and books for atleast half time enrollment and you can only claim this particular credit 4 times on any one person in thier lifetime. Please remember to keep reciepts on all of your textbook purchases as you may need them come time to fill out your taxes. The school will issue you a 1098-T which is also required in order to file your return. If you have any questions please give us a call.
On the 12th day of Christmas my tax man told to me.......... We hope you have a very Merry Christmas! Cherish and enjoy the time spent with your families this holiday season. One last tax tip for the year: Don't be afriad to ask for our help anytime throughout the year. It's better to know the what if's on any situation so you can prepare yourself and make any changes before it's to late. We are always here to help and we are just a phone call away.