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September 21, 2017
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4 Back-to-School Tax Tips

Its Back to School, what better time to think about tax deductions for school.

Education Tax Credits

Lifetime Learning credits or the Tuition and Fees Deduction are available for taxpayers enrolled in a college or university.

Under the Lifetime Learning Credit, taxpayers can claim qualified tuition and related expenses they’ve had at eligible educational institutions. A taxpayer can claim a tax credit equal to 20% of the first $10,000 paid for tuition, required fees, and certain other expenses during the calendar year.

Under the American Opportunity Tax Credit, student taxpayers can reduce their amount of tax owed as long as they are paying for tuition, supplies, and fees to an eligible educational institution. The student must be working towards a degree in order to qualify. The IRS will send the student a refund check for about 40% of the credits they qualify for.

Taxpayers cannot claim either deduction if their filing status is married filing separately or if another person can claim an exemption for them as a dependent on his or her tax return. This deduction phases out at higher income levels.

Before the 2017 tax year, if a student taxpayer didn’t qualify for either of the above credits, they were able to claim the “tuition & fees deduction” for qualified educational expenses. This deduction is available for qualifying expenses paid during the tax year in connection with enrollment during the year or any academic term. This deduction can be worth up to $4,000 whether or not the taxpayer itemizes their tax deductions. Unfortunately, Congress did not renew this deduction for the 2017 tax year so taxpayers cannot use it on their 2017 returns. If your clients still haven’t submitted their 2016 return, they may claim it on that return.

Student Loans

Back-to-school time also means the start of a new job for many recent college grads. If your client recently graduated and is paying the interest on their student loans, they will qualify for the student loan interest deduction. Their school will send them a 1098-E that will show how much interest they paid in the year. To deduct student loan interest, they will write the total of their interest paid (subject to a $2,500 annual limit) on the Student Loan Interest deduction line on Form 1040 or Form 1040A. They will be able to subtract that interest paid from their total earnings as an adjustment so they will have a lower adjusted gross income.

529 Plans

A 529 plan is a savings plan derived from Section 529 of the Internal Revenue Code (IRC). A 529 plan is an account used to pay for qualified higher education expenses such as tuition, fees, books, etc. This investment account can yield returns and also has tax advantages. For example, withdrawals from a 529 aren’t subject to federal taxes as long as they are used for college-related expenses. Each 529 plan is sponsored by a state so details of the plan will differ depending on the state.   

Coverdell Education Savings Account

A Coverdell savings account is another type of educational savings account for students. If a taxpayer’s modified adjusted gross income (MAGI) is less than $110,000 ($220,000 if filing a joint return), they may be able to establish a Coverdell ESA to finance the qualified education expenses of a designated beneficiary. Qualified education expenses include college expenses and certain elementary and secondary school expenses. Taxpayers can open both a Coverdell ESA and a 529 account. If a withdrawal is made from either or both accounts, the qualified educational expenses will need to be allocated appropriately for the beneficiary.

Back-to-school season can be stressful for parents and students alike. Review these tax savings tips and help your clients transition back into school with ease.

Author: Nushin Zarrabi

 

 

September 20, 2017
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New Service: Tax Concierge

What is a Tax Concierge you might ask? Glad you did. Has your tax person asked you to total your receipts and give them the totals?

Do you keep your receipts in a box till tax time? Then sit down, sort them, and finally total them?

This would literally save your sanity what I will do is sort your receipts, scan them, and total them by the categories your tax person wants. Saving you time.

If you use QuickBooks, I will send you a file you can import with all the individual transactions. If you use QuickBooks online I can import them for you.

Our fee is just $0.25 per receipt.

Sign up NOW in order to have your receipt ready for tax time.

 

September 10, 2017
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Recommendations

Fund an IRA if you do not have one look into a Self-Directed, Solo, or Check Book IRA. With these you can use the IRA money to buy any investment (see more on this on our web site). Your company can set up a retirement plan for its employees and if your children are on payroll as employees they qualify. I still like the self-directed kind but that is up to you. This letter is about your company saving tax dollars.

Hire your children I have written a post on Go-Pro’s web site you may wish to read. It has all the information you need to save your tax money when hiring your children. But just an idea of what you will find. In stead of paying your child an allowance, hire them and put them to work. Depending on their age they can file, shred, or even clean. The amount you pay them is deductible to your business. Continue Reading →

August 29, 2017
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Market Place – update

Hello, if you purchased your health insurance through the Market Place. Please, please remember that you need to watch your income. If your income increases you need to up date the Market Place so that you will not have a penalty on your tax returns.

You need to included money from all jobs, interest, dividends, self employment, retirement withdrawals (IRAs included), social security and disability.

August 26, 2017
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We Need a Review From You

I need your reviews. If you liked the work we did please leave us a review.
Thank you in advance!

 

August 18, 2017
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Investments

If you had $20,000 to invest you could put it into a mutual fund. These are running around a 5% profit a year. After 7 years you could have $28,142.

You could use your $20,000 to buy tax liens paying 18% in year 7 you would have $53,991.08

You could  borrow $180,000 and use the $20,000 as a down payment on a rental property with a value of $200,000. Lets assume the rental income covers your expenses. The property goes up in value say 5% a year. After the same 7 years your would have a property worth $281,000. You would owe the bank somewhere around $179,580 and you would have equity of around $101,420.

You could  use the second option except in year two you borrow against your equity to buy another property.  Do this every two years and in four years you would have four rentals worth over $2,000,000. Your equity would be around $273,000.

Once the bank knows what you are doing and that you are actually doing it you would only need 10% to buy the next properties.

Personally, I do not like using other peoples money (loans) so at this point I would work on getting these paid off. Four properties are giving you a really nice living.

To summarize:

$20,000 invested

Net Equity in 7 yrsAvg. annual return
$28,1425.8%
$53,991.0818%
$101,42058.2%
$273,198180.9%

 

August 17, 2017
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If you need fast cash, here are some ideas:

Drive for Uber or Lyft.

Companies like Uber and Lyft offer a great opportunity to make some quick cash. You'll need a clean driving record, a fairly new car and the authorization to work wherever it is that you live. If you have all of those things, you can work when it's feasible for you, whether that's in the middle of the day during rush hour, or in the wee hours of the night on a weekend. The choice is yours.  Continue Reading →