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Book Release from TaxAssurances

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We’re proud to announce the release of our first book, “Top 12 Tax Deductions You Might Have Missed. Tax Tips For People Who Do Their Own Federal Taxes” on Amazon (link in picture).

Every year, our tax clients ask what other tax benefits they can take advantage of. And with every client, that answer is different and depends on their individual circumstances.

But even though every client has a different set of circumstances, some tax benefits are standard and basic under the IRS tax code. And people may not be aware of them. Why?

Because the IRS tax code is long and complicated. Even some of what we have in this book is somewhat detailed. There are a lot of situations for the IRS to consider. But most people don’t have the time, interest or energy to go through it all. That’s our job here at TaxAssurances, LLC.

This book highlights some basic benefits available to taxpayers they may not be aware of. And most importantly, we provide exact IRS wording on what they want in specific situations.

We do offer this word of caution. For those individuals that aren’t sure if they have a simple or complicated tax return, we strongly recommend that they seek professional, personalized tax help. TaxAssurances and other firms are here for that. The savings and clarity are worth it.

Also, because of specific personal circumstances, readers should not solely rely on this book for guidance.

We put this Top 12 list together for people who file simple tax returns. Nothing complicated or complex. It’s designed to complement them as they prepare their own tax returns.

They’ve gone to the store and bought the prep software for $30 or $40 and are comfortable doing their own returns. Also, they don’t want to pay a tax preparer a bunch of money for a simple return. And the last thing they want to do is sit in an office waiting for the preparer to finish the return. They want this process to be quick and easy.

These tax filers do understand however that there might be simple and easy tax benefits that they can take advantage of that they might not be aware of. This book helps them out.

This book does not cover itemized deductions or handling homeownership. It also doesn’t cover having investments or rental properties.

The layout and chapters are simple. They match up with the tax benefits themselves. So if a reader wants a quick overview, they can just go through the table of contents. There they can find the benefit that may apply to their life and go to that chapter.

So hopefully this book provides just what readers are looking for in tax benefits for their life.

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Chapter from TaxAssurances’ Book: Child Tax Credit

 

The following post is a chapter in the TaxAssurances’ book, “Top 12 Tax Deductions You Might Have Missed. Tax Tips For People Who Do Their Own Federal Taxes.”

You can purchase the full book on Amazon.

Chapter 1  Child Tax Credit

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Besides being a blessing to a parent’s life, children can provide some real tax benefits. There are a few to consider.

First and foremost, they increase the number of exemptions and deductions a parent can have on their tax return. That’s a great start. But in this chapter, we’ll specifically discuss the child tax credit.

The $1,000 credit per child helps lower a parent’s tax liability for the year. And parents can use the credit for each one of their children.

There are some requirements to take the child tax credit and the IRS has provided some guidance. Here’s exactly what they say:

A qualifying child for purposes of the child tax credit is a child who:

  1. Is your son, daughter, stepchild, foster child, adopted child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of any of them (for example, your grandchild, niece, or nephew),
  2. Will be under age 17 at the end of the year,
  3. Did not provide over half of his or her own support for the year,
  4. Lived with you for more than half of the year (with certain exceptions),
  5. Is claimed as a dependent on your return,
  6. Does not file a joint return for the year (or files it only to claim a refund of withheld income tax or estimated tax paid), and  
  7. Was a U.S. citizen, a U.S. national, or a U.S. resident alien. For more information, see Pub. 519, U.S. Tax Guide for Aliens. If the child was adopted, see Adopted child.

Now, it is worth noting that the IRS imposes limits on taking the credit. Also, some parents may not be able to take the credit at all. Here’s what they says about those limits specifically:

You must reduce the maximum credit amount of $1,000 for each child if either (1) or (2) applies. 

  1. The amount on Form 1040, line 47; Form 1040A, line 30; or Form 1040NR, line 45, is less than the credit. If this amount is zero, you cannot take this credit because there is no any tax to reduce. But you may be able to take the additional child tax credit. This credit is for certain individuals who get less than the full amount of the child tax credit. The additional child tax credit may give you a refund even if you do not owe any tax. 
  1. Your modified adjusted gross income (AGI) is more than the amount shown below for your filing status. 
  1. Married filing jointly – $110,000. 
  1. Single, head of household, or qualifying widow(er) – $75,000. 
  1. Married filing separately – $55,000.

Now if that seems confusing don’t worry. The tax prep software works out the details for you. Just know that it is a credit that should appear on your tax return if you qualify.

So if you’re a parent that meets all of these qualifications, make sure you include all your child’s information on your tax return. It can help lower your taxes and potentially get you a larger tax refund.

For more information about the child tax credit and the additional child tax credit, read IRS Publication 972 on the IRS.gov website.

Again, You can purchase the full book on Amazon.

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An Excerpt from TaxAssurances’ Upcoming Book on Teaching Children About Money

A discussion about taxes can get complicated because there are different details and deductions and other things that go into it. But here’s a simple way of understanding taxes.

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The main message here, if you make $10 then $3 of that has to go to pay taxes to the government.

Now let’s dig deeper. The best thing to remember about taxes is that once you make over $6,300 or $10,000 for the year, you have to start paying taxes on the money you make.

There may be three different places where the taxes you pay go.

#1 is the IRS or the federal government in Washington DC.

#2 is the state you live and work in. Although many states don’t have a tax on your income.

#3 in very, very rare situations is to the city that you live and work in.

Now, it’s also worth noting that when it comes to paying federal taxes to the IRS, the more money you make the more of a percentage of income has to be paid in taxes. This is called a progressive tax.

Here’s how it works, let’s say you make $15,000 for the year. In this situation, your federal or IRS tax rate may be 10% of your income. That would make your tax bill $1,500 ($15,000 x 10%) for the year.

On the other hand if you make $150,000 per year your tax rate may be 28% and your tax bill will be $42,000 ($150,000 x 28%) for the year.

There are different details involved in how to figure out how much you should pay in taxes for the year based on the amount of income you make, but here is a more detailed summary of how our federal progressive tax system works. hhh

Again, there are many more details that go into how much has to be paid in taxes. But you have time to worry about that later for the most part.

Now when it comes to paying taxes most people that work for a company have the taxes taken out of their paycheck. That process makes paying taxes pretty ease. Here’s what the form looks like when you first start a job and want to have your federal taxes taken out of your paycheck (Your state and city would have their own separate form to fill out if necessary).ppp

The most important box here is box #5. Why? Because that box determines how much tax is taken out of your paycheck every pay period. As a general rule of thumb, the smaller the number in box #5 the more taxes are taken out. If you put 0 (the number zero) here, the most possible taxes will be taken out of your paycheck.

If at the end of the year it turns out that you paid more taxes then you were supposed to, the government will give you back the money as a refund. On the other hand, if you didn’t pay enough in taxes during the year the government wants you to pay the remainder of what you owe.

So how do you know how much you made for the year and how much you paid in taxes for the year? By getting this W2 form from every job you worked at for the year.rrr

Each company has to give you a copy of this form by January 31 of every year. Again, the information on it provides a summary of what happened the prior year from January 1 to December 31. You use this W2 and a number of other pieces of information to prepare your tax return from late January until mid-April. Usually April 15.

So what are the number in the different boxes? Here’s a quick summary:

Box #1 – How much you made that is taxable for the year.

Box #2- How much you paid to the IRS for the year.

Box #17- How much you paid in taxes to the state you work and live in.

Box #19- How much you paid in taxes to the city you live and work in.

Obviously there are more boxes here but we just wanted to highlight the ones you would pay attention to the most.

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Alimony Payments Are Tax Deductible

Here’s how the IRS describes what is tax deductible when it comes to divorce or separation:

Amounts paid under divorce or separate maintenance decrees or written separation agreements entered into between you and your spouse or former spouse are considered alimony for federal tax purposes if:

  • You and your spouse or former spouse do not file a joint return with each other
  • You pay in cash (including checks or money orders)
  • The payment is received by (or on behalf of) your spouse or former spouse
  • The divorce or separate maintenance decree or written separation agreement does not say the payment is not alimony
  • If legally separated under a decree of divorce or separate maintenance, you and your former spouse are not members of the same household when you make the payment
  • You have no liability to make the payment (in cash or property) after the death of your spouse or former spouse, and
  • Your payment is not treated as child support or a property settlement

So as you can see, for taxpayers that are going through a divorce and have to pay alimony there is a silver lining. The payments are tax deductible.

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Nurses Recommend Nurse to Patient Ratios

We as a country spend a lot of our federal tax dollars on medical care. Medicare, medicaid and the  affordable care act (Obamacare) are large parts of that spending.

Much of that care money is spent on the hard work that our country’s nurses provide. But they are human beings and not robots in an assembly line. There is a physical limit to what they can do to deliver optimal care to patients.

The image above is their recommendation on what the nurse to patient ratio should look like. Here is what they further say:

National Nurses United(NNU) — the largest union of registered nurses in the country — is proud to announce the introduction today in the U.S. Senate by Sen. Sherrod Brown (S.1063) and in the U.S. House of Representatives by Rep. Jan Schakowsky (H.R. 2392) NNU-sponsored legislation setting specific safety limits on the numbers of patients each RN can care for in hospitals throughout the U.S.

The bills, both known as the Nurse Staffing Standards for Hospital Patient Safety and Quality Care Act, establish minimum RN-to-patient ratios for every hospital unit at all times. They also provide whistleblower protection to assure that nurses are free to speak out for enforcement of safe staffing standards.

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Gambling Losses are Tax Deductible

Gambling losses are tax deductible. But don’t go running out to your favorite casino and gamble a bunch of your money away thinking you’re going to get a tax deductions. Doesn’t work that simply.

Your gambling losses can be used to offset any gambling winnings you had during the year. Because as a quick reminder, you have to pay federal, state and maybe even local (like New York City) taxes on any money you make gambling.

Here’s how the losses help.

Let’s say you win $1,000 for the year gambling. Yeeee! The downside again is that it’s all taxable.

Now, let’s be honest and say you actually lost $3,000 during the year on your other gambling. The IRS won’t let you deduct the full $3,000 but they will let you write off $1,000 of those losses to offset the $1,000 gain. That’s how gambling losses help.

The important part in all this, keep receipts to show proof in case they ask for it.

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President Trump’s 2018 Budget Proposal

Today, Mick Mulvaney, Director of the Office of Management and Budget (OMB), released President Donald Trump’s budget proposal for 2018.

Here is the full text

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Children Offer Parents Some Great Tax Benefits

Between child tax credits, child and dependent care credits, an increase in deductions and exemptions, children do give parents some great tax benefits.

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