Aloian Accounting & Tax Service

02/17/2015

Maintaining Health Insurance Coverage Documentation for the Tax Filing Season

Gathering documents and maintaining well-organized records make it easier to prepare a tax return. They can also help provide answers if the IRS needs to follow-up with you for more information.

You will not need to send the IRS proof of your health coverage. However, you should keep any documentation with your other tax records. This includes records of your family’s employer-provided coverage, premiums paid, and type of coverage. You should keep these – as you do other tax records – generally for three years after you file your tax return.

When preparing 2014 tax returns, most people will simply have to check a box to indicate they and everyone on their tax return had health care coverage for the entire year. You will not need to file any additional forms, unless you are claiming the premium tax credit or a coverage exemption.

You will attach Form 8965, Health Coverage Exemptions to your tax return to claim a coverage exemption. Do not attach supporting documentation to the tax return. If you applied for an exemption from the Marketplace and received an Exemption Certificate Number, or you have other documentation to support your exemption claim, keep these with your tax records.

You will attach Form 8962, Premium Tax Credit to your tax return to claim the credit. Do not attach the Form 1095-A, Health Insurance Marketplace Statement that you use to complete Form 8962. Keep Form 1095-A with your tax records.

02/17/2015

Stay Vigilant Against Bogus IRS Phone Calls and Emails

Tax scams take many different forms. Recently, the most common scams are phone calls and emails from thieves who pretend to be from the IRS. They use the IRS name, logo or a fake website to try to steal your money. They may try to steal your identity too. Here are several tips from the IRS to help you avoid being a victim of these tax scams:

The real IRS will not:
•Initiate contact with you by phone, email, text or social media to ask for your personal or financial information.
•Call you and demand immediate payment. The IRS will not call about taxes you owe without first mailing you a bill.
•Require that you pay your taxes a certain way. For example, telling you to pay with a prepaid debit card.

Be wary if you get a phone call from someone who claims to be from the IRS and demands that you pay immediately. Here are some steps you can take to avoid and stop these scams.

If you don’t owe taxes or have no reason to think that you do:
•Contact the Treasury Inspector General for Tax Administration. Use TIGTA’s “IRS Impersonation Scam Reporting” web page to report the incident.
•You should also report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add "IRS Telephone Scam" to the comments of your report.

If you think you may owe taxes:
•Ask for a call back number and an employee badge number.
•Call the IRS at 800-829-1040. IRS employees can help you.

In most cases, an IRS phishing scam is an unsolicited, bogus email that claims to come from the IRS. They often use fake refunds, phony tax bills, or threats of an audit. Some emails link to sham websites that look real. The scammers’ goal is to lure victims to give up their personal and financial information. If they get what they’re after, they use it to steal a victim’s money and their identity.

If you get a ‘phishing’ email, the IRS offers this advice:
•Don’t reply to the message.
•Don’t give out your personal or financial information.
•Forward the email to [email protected]. Then delete it.
•Don’t open any attachments or click on any links. They may have malicious code that will infect your computer.

02/09/2015

To Parents: Don’t Miss Out on These Tax Savers

Children may help reduce the amount of taxes owed for the year. If you’re a parent, here are several tax benefits you should look for when you file your federal tax return:

• Dependents. In most cases, you can claim your child as a dependent. You can deduct $3,950 for each dependent you are entitled to claim. You must reduce this amount if your income is above certain limits.

• Child Tax Credit. You may be able to claim the Child Tax Credit for each of your qualifying children under the age of 17. The maximum credit is $1,000 per child. If you get less than the full amount of the credit, you may be eligible for the Additional Child Tax Credit.

• Child and Dependent Care Credit. You may be able to claim this credit if you paid for the care of one or more qualifying persons. Dependent children under age 13 are among those who qualify. You must have paid for care so that you could work or could look for work.

• Earned Income Tax Credit. You may qualify for EITC if you worked but earned less than $52,427 last year. You can get up to $6,143 in EITC. You may qualify with or without children.

• Adoption Credit. You may be able to claim a tax credit for certain costs you paid to adopt a child.

• Education tax credits. An education credit can help you with the cost of higher education. There are two credits that are available. The American Opportunity Tax Credit and the Lifetime Learning Credit may reduce the amount of tax you owe. If the credit reduces your tax to less than zero, you may get a refund. Even if you don’t owe any taxes, you still may qualify. You must complete Form 8863, Education Credits, and file a return to claim these credits.

• Student loan interest. You may be able to deduct interest you paid on a qualified student loan. You can claim this benefit even if you do not itemize your deductions.

• Self-employed health insurance deduction. If you were self-employed and paid for health insurance, you may be able to deduct premiums you paid during the year. This may include the cost to cover your children under age 27, even if they are not your dependent.

02/05/2015

What You Should Know if You Get Tipped at Work

If you get tips on the job, you should know some things about tips and taxes. Here are a few tips from the IRS to help you file and report your tip income correctly:

• Show all tips on your return. You must report all tips you receive on your federal tax return. This includes the value of tips that are not in cash. Examples include items such as tickets, passes or other items.

• All tips are taxable. You must pay tax on all tips you received during the year. This includes tips directly from customers and tips added to credit cards. It also includes your share of tips received under a tip-splitting agreement with other employees.

• Report tips to your employer. If you receive $20 or more in tips in any one month, you must report your tips for that month to your employer. You should only include cash, check and credit card tips you received. Do not report the value of any noncash tips on this report. Your employer must withhold federal income, Social Security and Medicare taxes on the reported tips.

• Keep a daily log of tips. Use Publication 1244, Employee's Daily Record of Tips and Report to Employer, to record your tips. This will help you report the correct amount of tips on your tax return.

01/30/2015

If You Work, The Earned Income Tax Credit Can Work For You!

Since 1975, the Earned Income Tax Credit has helped workers with low and moderate incomes get a tax break each year. Four out of five eligible workers claim EITC, but the IRS wants everyone who is eligible to claim this credit. Here are some things you should know about this valuable credit:

* Review Form 8867http://www.irs.gov/file_source/pub/irs-pdf/f8867.pdf

* Review the questions on pages 1 thru 3 and the documentation requirements
of page 4. If you meet all these questions properly your on your way to qualify
for the EITC.

• Review your eligibility. If you worked and earned under $52,427, you may qualify for EITC. If your financial or family situation has changed, you should review the EITC eligibility rules. You might qualify for EITC this year even if you didn’t in the past. If you qualify for EITC you must file a federal income tax return and claim the credit to get it. This is true even if you are not otherwise required to file a tax return. Don’t guess about your EITC eligibility. Use the EITC Assistant tool on IRS.gov. The tool helps you find out if you qualify and estimates the amount of your EITC.

• Know the rules. You need to understand the rules before you claim the EITC, to be sure you qualify. It’s important that you get this right. Here are some factors you should consider:

o Your filing status can’t be Married Filing Separately.

o You must have a Social Security number that is valid for employment for yourself, your spouse if married, and any qualifying child listed on your tax return.

o You must have earned income. Earned income includes earnings from working for someone else or working for yourself.

o You may be married or single, with or without children to qualify. If you don’t have children, you must also meet age, residency and dependency rules. If you have a child who lived with you for more than six months of 2014, the child must meet age, residency, relationship and the joint return rules to qualify.

o If you are a member of the U.S. Armed Forces serving in a combat zone, special rules apply.

• Lower your tax or get a refund. The EITC reduces your federal tax and could result in a refund. If you qualify, the credit could be worth up to $6,143. The average credit was $2,407 last year.

Form 8867 link Below:

http://www.irs.gov/file_source/pub/irs-pdf/f8867.pdf

01/29/2015

The Health Care Law’s Effect on You

Nearly everyone is affected by the Affordable Care Act and will need to do something new when filing their taxes this year. The following chart will help you better understand how the health care law affects you and everyone on your return. This chart is also available on IRS.gov/aca.

To help navigate these changes, taxpayers and their tax professionals should consider filing returns electronically.Using tax preparation software is the best and simplest way to file a complete and accurate tax return as it guides individuals and tax preparers through the process and does all the math. There are a variety of electronic filing options, including free volunteer assistance, IRS Free File for taxpayers who qualify, commercial software, and professional assistance.


IF YOU…

THEN YOU…


Are U.S. citizens or are non-U.S. citizens living in the United States

Must have qualifying health care coverage, qualify for a health coverage exemption, or make a payment when you file your tax return


Have health coverage through an employer or under a government program such as Medicare, Medicaid and coverage for veterans for the entire year

Just have to check a box on your Form 1040 series return and do not read any further


Do not have coverage for any month of the year

Should check the instructions to Form 8965 to see if you are eligible for an exemption


Are eligible for an exemption from coverage for a month

Are not responsible for making an Individual Shared Responsibility payment for that month, and must claim the exemption or report an exemption already obtained from the Marketplace by completing Form 8965, Health Coverage Exemptions,and submitting it with your tax return


Do not have coverage and are not eligible for an exemption from coverage for any month of the year

Are responsible for making an individual shared responsibility payment when you file your return


Are responsible for making an individual shared responsibility payment

Will report it on your tax return and make the payment with your taxes


Received the benefit of more advance payments of the premium tax credit than the amount of credit for which you qualify

Will repay the amount in excess of the credit you are allowed subject to a repayment cap


Need qualifying health care coverage for 2015

Can enroll in health insurance through the Health Insurance Marketplace (Marketplace) during the open enrollment period that runs through Feb. 15, 2015; once open enrollment ends, individuals can enroll only if they qualify under special enrollment provisions


Enroll in health insurance through the Marketplace for yourself or someone else on your tax return

Might be eligible for the premium tax credit


Did not enroll in health insurance from the Marketplace for yourself or anyone else on your tax return

Cannot claim the premium tax credit


Or another person on your tax return who is enrolled in coverage through the Marketplace is not eligible for health care coverage through your employer or under a government program

Might be eligible for the premium tax credit


Are eligible for the premium tax credit

Can choose to get premium assistance now to lower your monthly payments or get all the benefit of the credit when you claim it on your tax return


Choose to get premium assistance now

Will have payments sent on your behalf to your insurance provider. These payments are called advance payments of the premium tax credit


Get the benefit of advance payments of the premium tax credit and experience a significant life change, such as a change in income or marital status

Report these changes in circumstances to the Marketplace when they happen


Get the benefit of advance payments of the premium tax credit

Will report the payments on your tax return and reconcile the amount of the payments with the amount of credit for which you are eligible




More Information

Find out more about the tax-related provisions of the health care law at IRS.gov/aca.

Find out more about the health care options at HealthCare.gov.

The Affordable Care Act contains comprehensive health insurance reforms. This law includes tax provisions that affect individuals and families, as well as businesses, insurers, tax-exempt organizations, and government entities. For individuals, the law requires you and everyone on your return to rep…

01/29/2015

Choose the Right Filing Status

It’s important that you use the correct filing status when you file your tax return. Your status can affect the amount of tax you owe for the year. It may even affect whether you must file a tax return. Keep in mind that your marital status on Dec. 31 is your status for the whole tax year. Sometimes more than one filing status may apply to you. If that happens, choose the one that allows you to pay the lowest tax.

IRS e-file is the easiest and most accurate way to file your tax return. The tax software you use to e-file helps you choose the right filing status. Remember, most people can use tax software and e-file for free with IRS Free File. The free service is only available through the IRS.gov website. Just click on “Free File” on the IRS.gov home page.

Here’s a list of the five filing statuses:

1. Single. This status normally applies if you aren’t married. It applies if you are divorced or legally separated under state law.

2. Married Filing Jointly. If you’re married, you and your spouse can file a joint tax return together. If your spouse died in 2014, you often can file a joint return for that year.

3. Married Filing Separately. A married couple can choose to file two separate tax returns. This may benefit you if it results in less tax than if you file a joint tax return. It’s a good idea for you to prepare your taxes both ways before you choose. You can also use it if you want to be responsible only for your own tax.

4. Head of Household. In most cases, this status applies if you are not married, but there are some special rules. You also must have paid more than half the cost of keeping up a home for yourself and a qualifying person. Don’t choose this status by mistake. Be sure to check all the rules before you file.

5. Qualifying Widow(er) with Dependent Child. This status may apply to you if your spouse died during 2012 or 2013 and you have a dependent child. Certain other conditions also apply.

Note for same-sex married couples. In most cases, you and your spouse must use a married filing status on your federal tax return if you were legally married in a state or foreign country that recognizes same-sex marriage. That’s true even if you now live in a state that doesn’t recognize same-sex marriage. Visit IRS.gov for more information.

01/28/2015

4 Tax Deductions That Can Save You Big Bucks

If you haven’t thought about your taxes since April last year here are four deductions that you could easily miss because of changing or delayed tax laws. Long-form tax filers subtract deductions from their income before they calculate the amount of tax owed.

Although there aren’t any new deductions for 2014 taxes, there are some existing ones that can be easily overlooked. There are also some “tax extenders” that weren’t renewed at the end of 2013 but that Congress retroactively passed at the end of 2014. The tax extenders are applicable for 2014 but expired on Dec. 31 so they aren’t applicable for 2015 unless Congress renews them again – a likely decision since the GOP holds the majority in both houses.

Related: The 10 Best States for Taxes in 2015

Michael Campbell, tax partner at BDO US, told The Fiscal Times that deductions that were retroactively added by Congress are good news but make it difficult for taxpayers to plan ahead and estimate their 2015 taxes. “It’s a bit frustrating,” he said.

Here are two deductions that are often overlooked:

Health Insurance Premiums
The impact of the Affordable Care Act on 2014 taxes will be costly for some this year, but if you’re self-employed, you can deduct your health insurance premiums. The deduction is for medical, dental and long-term care insurance premiums that self-employed people often pay for themselves, their spouse and dependents, according to the Internal Revenue Service.

Mortgage Points
Most people know about the mortgage interest deduction, but if you took advantage of low interest rates to refinance your mortgage and you paid points to lower your rate, you can also deduct the cost of those points. However, you’ll need to spread the cost of the points over the life of your mortgage. “People don’t usually pay attention to it,” said Campbell, adding that taxpayers are usually more focused on deducting mortgage interest payments.

Here are two deductions that were reinstated through tax extenders:

State and Local Sales Tax
Those in states like California or New York can deduct state income taxes, but if you live in a state with no income tax, you can deduct the state and local sales tax instead. This is great news for those living in Florida or Texas. Just remember to keep receipts.

Bonus Depreciation
Small and mid-size business owners can write off 50 percent of the costs of assets they purchased for their business in 2014. They can deduct up to $500,000 of qualifying assets--up from what they initially thought would only be $25,000 before Congress passed the tax extenders.

When added together, all these deductions can significantly help you save real money. So check with your accountant to see if you qualify for these deductions.

Campbell also wants to remind taxpayers that if your deductions total more than the standard deduction every taxpayer receives, which is usually the case if you’re a homeowner, you’d be better off filing itemized deductions even if it might be a bit more time consuming.

“If you go beyond that amount, it’s to your benefit to itemize,” he said.

01/27/2015

The Health Care Law's Effect on Your Tax Return

The Affordable Care Act contains tax provisions that affect the 2014 income tax return you file this year. Almost everyone is affected by the individual shared responsibility provision while only people who purchased coverage through the Marketplace are affected by the premium tax credit. The following chart will help you better understand what you need to do on your tax return. This chart is also available on IRS.gov/aca.

02/01/2013

You can check the status of your federal tax refund by using "Where's My Refund?", an interactive tool available on www.IRS.gov or by using the "IRS2Go" smartphone application. You can also call the IRS TeleTax System at (800) 829-4477 or the IRS Refund Hotline at (800) 829-1954. When using any of these options, you will need the following information:

The first S.S.N. shown on your return
Your filing status
The exact amount of refund on your federal return

01/31/2013

Choosing Which Form to File

IRS e-file makes it easy for taxpayers to choose which tax form to file. Tax software automatically chooses the best form for your particular situation. Most people e-file these days, but if you prefer taking pen to paper, the IRS has some tips to help you choose the right form. Taxpayers who choose to file a paper tax return should know that the IRS no longer mails paper tax packages. The quickest way to get forms and instructions is by visiting the IRS website at IRS.gov. You can also order forms and have them mailed to you by calling the IRS forms line at 1-800-TAX-FORM (829-3676). You may also pick up tax forms from a local IRS office, and some libraries and post offices carry tax forms.

Here are some tips that will help paper tax return filers choose the best tax form for their situation.

You can generally use the 1040EZ if:
•Your taxable income is below $100,000;
•Your filing status is single or married filing jointly;
•You are not claiming any dependents; and


If you can’t use Form 1040EZ, you may qualify to use the 1040A if:
•Your taxable income is below $100,000;
•You have capital gain distributions;
•You claim certain tax credits; and

You claim adjustments to income for IRA contributions and student loan interest.

If you cannot use the 1040EZ or the 1040A, you’ll probably need to file using the 1040. The reasons you must use the 1040 include:
•Your taxable income is $100,000 or more;
•You claim itemized deductions;
•You are reporting self-employment income; and

IRS Publication 17, Your Federal Income Tax, provides helpful information about which form is best for you.

01/25/2013

Included inside the American Taxpayer Relief Act (ATRA) passed on January 1, 2013 is a permanent “Alternative Minimum Tax (AMT)” patch. When this was set to expire at the end of 2012 the Congressional Budgeting Office (CBO) estimated around 30 million extra Americans would be required to pay the AMT tax in addition to their regular tax. The ATRA “patches” the AMT for subsequent years by increasing the exemption amounts and allowing non-refundable personal credits to the full amount of the individual’s regular tax and AMT. Exemption amounts are as follows $50,600 for unmarried individuals, $78,750 for married filing joint and $39,975 for married filing separately which will be adjusted for inflation annually. The AMT tax is extremely confusing for taxpayers; you may have to pay the AMT if your taxable income for regular tax purposes plus any adjustments and preference items that apply to you are more than the AMT exemption amount. The Alternative Minimum Tax attempts to ensure that anyone who benefits from certain tax advantages pays at least a minimum amount of tax. The AMT provides an alternative set of rules for calculating your income tax. In general, these rules should determine the minimum amount of tax that someone with your income should be required to pay. If your regular tax falls below this minimum, you have to make up the difference by paying alternative minimum tax. A good starting point to determine if you will be required to pay this additional tax is to determine if you received any of these benefits:

•Accelerated Depreciation
•Stock by exercising an incentive stock option and you did not dispose of the stock in the same year
•Tax exempt interest from private activity bonds
•Intangible drilling, circulation, research, experimental or mining costs
•Amortization of pollution-control facilities or depletion
•Income (or loss) from tax-shelter farm activities or passive activities
•Income from long-term contracts not figured using the percentage-of-completion method
•Interest paid on a home mortgage NOT used to buy, build or substantially improve your home
•Investment interest expense reported on Form 4952
•Net operating loss deduction
•Alternative minimum tax adjustments from an estate, trust, electing large partnership or cooperative
•Section 1202 exclusion
•Any general business credit in Part I on Form 3800
•Empowerment zone and renewal community employment credit
•Qualified electric vehicle credit
•Alternative fuel vehicle refueling property credit
•Credit for prior year minimum tax