Sunday, January 31, 2010

Earned Income Tax Credit - EITC

The earned income tax credit aka EITC is a tax credit for people who work and have less than 48,279 of earned income. The EITC is a refundable credit. That means anything left over after your tax liability has been eliminated, you may receive as a part of your refund.

There are 7 rules that everyone must meet in order to qualify for the credit:

1. Your adjusted gross income must be less than $43,279 ($48,279 for married filing jointly)if you have three or more qualifying children.

* $40,295 ($45,295 for married filing jointly) if you have two qualifying children.

* $35,463 ($40,463 for married filing jointly) if you have one qualifying child.

* $13,440 ($18,440 for married filing jointly) if you do not have a qualifying child.

2. You must have a valid social security number.

3. Your filing status cannot be Married Filing Separately.

4. You must be a U.S. citizen, or a resident alien all year.

5. You cannot file form 2555 or form 2555-ez (relating to foreign earned income)

6. Your investment income must be $3,100 or less.

7. You must have earned income.

The above seven points must be met. If not you will not qualify.

There is really nothing that you need to do except have all proper information in regards to your children, or dependents that will qualify you for the credit. IE: social security numbers and full birth date information...month, day and year.

This is a fantastic credit. For instance if your AGI (adjusted gross income) is at least $27,450 but less than $27,500 and you have one child, you may be able to receive up to $1,276 and if you have two children up to $2,700 and three children up to $3,328.

****Disclaimer****All tax situations are unique. Information offered here is for general knowledge, and should not be used to apply to any one's personal tax story. The outcome of your tax situation can only be determined with the proper input and analysis by a tax professional, or even by yourself if that is your choice****

Contact me for affordable tax preparation. Virtual preparation is easy and secure.

I look forward to being your tax professional. Always affordable, and always free efile.

Wanda E Green

Wednesday, January 27, 2010

Buy a bond with part of your refund

Do you know that with your tax refund you can purchase up to $5000 in US Series I savings bonds, in multiples of $50?   You must have direct deposit.  Once the election for bonds have been made, the remaining amount will be deposited in the banking institutions of your choice.  You can split your refunds into up to three accounts.  This is not a bad deal at all.  The return on the bonds is 5.64%.  The bonds MUST be held for 1 full year before redemption can take place.  If redeemed anytime between 1 and 5 years of holding you will lose 3 months of interest as a penalty.  At this point you can only purchase the bonds in your name.  At a later date you will be able to purchase bonds for others.

At the time of tax preparation, you will tell me (your preparer) that you would like to purchase bonds with your refund.  I advise you that you must direct deposit the refund, and I will get your bank information from you, ie:  routing number, account number.  Within 7 to 10 days your remaining refund will be deposited into your designated account.  The bonds will come to you in the mail, and it could take up to 5 weeks (or less).

Call or email me with your questions.

Virtual Tax Preparation, always at an affordable rate.  Credit card and cash accepted.

I look forward to being your tax professional.
Wanda (Uigei)

Monday, January 25, 2010

Business use of your vehicle

The question is : Can you deduct part of your car note payment for a vehicle used mostly for business? If so how much of it?

Disclaimer :  All advice is limited and general.  Individual and in depth answers come with a detailed and in depth interview with a client.

Answer :  Remembering that the key to self-employment expenses is recordkeeping.  The extent of deduction for business, is the extent that the car is used for business.  "Mostly for business", means that you are using the car for other reasons as well.  If you use the car for 50% of business, then you can deduct up to 50% of the car note and insurance and tags, and repair and maintenance etc. for business. 

Recordkeeping :  You must keep accurate records. Period !  In the event of an audit, "that's what's gone' save yo' behind" !  That is as long as you have legitimate expenses.
Your journal or log does not have to be anything fancy, but it does have to and must show consistancy.  That means that you should have daily entries.  For the vehicle you must have a starting date entry for miles....Jan 1 thru Dec 31...Business Miles             Commuter Miles                Other Miles
When you leave your home, and make your way to your permanent, or first job site, you cannot add those miles....when you leave that site to go to another job site, those are the miles that you can well, from your last job site to your home, you cannot count those miles.  You log the miles, but they will not be included in business miles.  To work, and back home are commuter miles.  Since this vehicle in question is being used for "other than business as well"...those would be considered as other miles. 
This year the standard mileage rate you will receive for operating your car for business use is 55 cents per mile.  So if you are a truck driver, this could turn into a great deal of credit.

I'll make sure that you receive all the credits you are entitled to.  Virtual tax prepartion is a specialty of mine.  Secure, accurate and affordable. Call me for additional information.

Deep discount goin' on over here !

Keep the questions coming.

Wanda E Green (Uigei)

Sunday, January 24, 2010

The Sole Proprietor

A sole proprietor is someone who owns an unincorporated business by himself or herself; also known as being self-employed.  You use your social security number, or your EIN (employer identification number), to be recognized and tracked by the IRS.  You may or may not have employees, but you are responsible for your own taxes.

Self-employed individuals file a Schedule C.  Some will receive a 1099-MISC from other individuals for work they have done for others as contract labor, some will generate their own cash flow for work done on their own accord, and many will have both.  Some self-employed individuals will as well be employees and receive a W-2.  These folks will file a 1040 as well as their Schedule C

One very important key to a successful business is record keeping.  A journal, or log, or daily intake and expense registration will prove to be essential to a business.  Many business owners employ a bookkeeper.  Tracking expenses carefully is mandatory for a business.  The more profit, the more tax to be paid.

Depending on the business, there may be some unique expenses, but for most there are the standards : 
  • Advertising
  • Office expense
  • Contract Labor
  • Rents
  • Maintenance & repairs
  • Utilities
  • Telephone
  • Business vehicle expense
  • Tax & license
  • Insurance
  • Wages
  • Supplies
  • Legal & professional fees
These are just a few of the possible expenses.  There are many more. 

Call me to discuss your individual tax situation.  I look forward to being your tax professional.

Wanda E Green

Please feel free to offer my blog information to your friends and family...

Friday, January 22, 2010

It's Tax Time

For many, this time of year, "Tax Time" brings about pangs of anx and fear. The fear of their tax professional telling them that they OWE is a frightening thing. It doesn't have to be.

The first step to a positive tax time experience, if you are an employee is your W-4. The W-4 is one of the forms you sign when you are first hired for a job. You're signing this form so that your employer will know the correct amount of federal income tax to withheld from your pay. Fill out the personal allowance worksheet, and carry the numbers down. As long as you read carefully and follow the instruction, you should be good to go. There are special instructions for married folks, and folks with more than one job. There's even an option to have additional monies withheld...this is optional, and not mandatory Get this part right, and you should be fine. Should be.....those who choose to claim more allowances than they have, usually find themselves in a tight situation at the end of the year. These, many times are the folks that owe.

Note: Every time you start a new job, you MUST file a 10 jobs...10 W-4s !

Self-employed individuals need to pay their taxes quarterly. If you suspect that your tax liability is going to be more than $1000 after subtracting your withholdings and refundable credits, you may need to pay estimated taxes (other rules apply).

Once you have this covered, and apply what needs to be applied, you should be in a positive tax situation at the end of the year.

At the end of the year, your employer will issue you a W-2. It will contain your income received for the year, and all the taxes that were withheld....including social security and medicare taxes. Once received, this is the document (along with others that apply to your situation) that is given to your tax professional.

Many families know that filing their taxes is a way to take advantage of the many, many refundable credits given to us from the federal government. Most of us will receive a refund.

This is Wanda, many of you know me as Uigei and I offer affordable tax preparation. All states except Washington State. Contact me for any special "situations" you may have questions about.

This has been quite a trying time for so many of us. As affordable as my rates are, I understand that many will need a....well you know. Talk to me, we can work something out. I mean that.

Credit Cards (through PayPal) and Cash accepted.

Many Blessings, and Thank you for reading. I look forward to being your tax professional.
Wanda (Uigei)