A Checklist and Books from TaxAssurances for the Tax Season

Tax season is here and TaxAssurances is here to help tax payers prepare for it. Every year we give our clients a checklist for all the information we need in order to prepare their returns. Here is that checklist.

TAX PREP CHECKLIST

At TaxAssurances we also recognize that many people want to prepare their own tax return. Here are two books we’ve published to help.
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The first book, Top 12 Tax Deductions You Might Have Missed: Tax Tips For People Who Do Their Own Federal Taxes is for tax payers that file simple tax returns but want to make sure they take advantage of all the tax benefits possible.

The second book, Top 23 Tax Deductions You Might Have Missed: Tax Tips For People Who Do Their Own Federal Taxes is for tax payers that file complex and complicated tax returns.

Both books help self filers make sure they uncover all the possible deductions they have available. We hope they help.

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Chapter from TaxAssurances’ Book: Marriage

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 7 Marriage

Not only is a marriage a union based on love and trust it also offers tax benefits. For instance, married couples that file their taxes together have higher standard deductions and exemptions than individuals that file single, head of household or married filing separately. As a result, married couples most likely have lower tax bills.

There are couples however that decide to file their tax returns separately. While they do have it as a option, here’s how the IRS describes what they are giving up:

• “If you choose married filing separately as your filing status, the following special rules apply. Because of these special rules, you usually pay more tax on a separate return than if you use another filing status you qualify for.

• Your tax rate generally is higher than on a joint return.

• Your exemption amount for figuring the alternative minimum tax is half that allowed on a joint return.

• You cannot take the credit for child and dependent care expenses in most cases, and the amount you can exclude from income under an employer’s dependent care assistance program is limited to $2,500 (instead of $5,000). However, if you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. For more information about these expenses, the credit, and the exclusion, see chapter 32.

• You cannot take the earned income credit.

• You cannot take the exclusion or credit for adoption expenses in most cases.

• You cannot take the education credits (the American opportunity credit and lifetime learning credit) or the deduction for student loan interest.

• You cannot exclude any interest income from qualified U.S. savings bonds you used for higher education expenses.

• If you lived with your spouse at any time during the tax year:

• You cannot claim the credit for the elderly or the disabled, and

• You must include in income a greater percentage (up to 85%) of any social security or equivalent railroad retirement benefits you received.

• The following credits and deductions are reduced at income levels half those for a joint return:

• The child tax credit,

• The retirement savings contributions credit,

• The deduction for personal exemptions, and

• Itemized deductions.

• Your capital loss deduction limit is $1,500 (instead of $3,000 on a joint return).

• If your spouse itemizes deductions, you cannot claim the standard deduction. If you can claim the standard deduction, your basic standard deduction is half the amount allowed on a joint return.

So as the list above suggests, if you’re married or getting married, file your tax return together. There are some real tax benefits.

For more information about being married and filing tax returns, read “Filing Status” on the IRS.gov website.

Again, You can purchase the full book on Amazon.

For more on TaxAssurances, check out our reviews, photos and links on Google Reviews.

Also, here is a link to our Signup Form to subscribe to our list.

Facebook Chat on Whether to Use 401k Money to Payoff Student Loans

Student-Loans

Here is the text from a recent Facebook chat I had with a friend about whether or not to take money out of her 401k to pay off her student loans:

Her:
If I withdrew money from my 401k to pay off student loans, does that result in double taxation?
TaxAssurances:
There’s a tax on the 401k as income and the 10% penalty for taking it out to early.
TaxAssurances:
Also, with the student loan you lose out on the future deductibility.
Her:
That will happen this year as result of my raise.
TaxAssurances:
Then it’s a cash flow/total savings debate.
Her:
I was thinking about it because we are approaching > $250 combined income and reduction in mortgage interest deduction.
TaxAssurances:
understand. It all comes to your overall comfort level. How much you have saved versus using the money now to get rid of the student loan debt. Are you comfortable for emergencies and general savings.
Her:
It will put me in no debt status…which means more cash flow for savings. I’m not worried about retirement because I plan to work until my brain stops.
TaxAssurances:
Seems like you thought it out….your husband on board?
Her:
Nope
TaxAssurances:
Talk it out.
Chat Conversation End

This chat goes to some of the issues and concerns surrounding the decision to take a lump sum and pay off student loans. Each circumstance is different but ultimately it comes down to what works best of all.

For more on TaxAssurances, check out our reviews, photos and links on Google Reviews.

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You Cannot Deduct Your Commuting Expenses

SONY DSCEvery so often during tax season I get a client that wants to deduct the expense of going back and forth to work on their taxes. They cannot do it. Here is what the IRS says about it:

“You cannot deduct the costs of taking a bus, trolley, subway, or taxi, or of driving a car between your home and your main or regular place of work. These costs are personal commuting expenses. You cannot deduct commuting expenses no matter how far your home is from your regular place of work. You cannot deduct commuting expenses even if you work during the commuting trip.

Example. You sometimes use your cell phone to make business calls while commuting to and from work. Sometimes business associates ride with you to and from work, and you have a business discussion in the car. These activities do not change the trip from personal to business. You cannot deduct your commuting expenses.”

 

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