Category Archives: Tax Preparation

Whether you’re a new parent or you’ve been claiming dependents for years, tax law is complicated and always changing — and at Beaton Accounting, we want to you stay on top of your taxes for an audit-free, wealth-maximized year.

Here are the 6 most important things to keep in mind this year as you claim more than just yourself on your 2011 federal income tax return.

1. Claiming an exemption reduces the amount your income can be taxed. There are two types of exemptions: personal exemptions and exemptions for dependents. Each of these exemptions allows you to deduct $3,700 on your 2011 tax return.

2. You CANNOT claim your spouse as your dependent. When filing a joint return with your spouse, you may claim one exemption for yourself and one for your spouse. If filing separate returns, you may claim a dependent exemption for your spouse ONLY IF the following applies:

– Made $0 gross income that year

– Are not filing a joint return

– Are not already being claimed as a dependent to another taxpayer

3. All of your immediate children qualify for a dependent exemption. Generally, each of your dependents qualifies you for an exemption. A dependent is your qualifying child or qualifying relative in your care. You must list the Social Security Number of any dependent you claim for an exemption.

4. If YOU are claimed as a dependent, you may still have to file your own federal tax return. Depending on the amount of your unearned, earned or gross income, your marital status and whatever special taxes you owe, it may be a requirement that you file your own tax return separately.

5. If you are claimed as a dependent, you no longer qualify for an exemption. Once someone else claims you on their federal income tax return (such as a parent or a spouse), you can no longer claim your own personal exemption on your own tax return.

6. Some people do not qualify as dependents. Spouses filing a joint claim with you do not qualify as dependents. In addition, any dependent you claim must be a U.S. citizen, U.S. resident alien, U.S. national or resident of Canada or Mexico for some part of the year. However, there are some rare exceptions to this.

If you have any lingering questions on claiming dependents, or if you prefer to have your tax return prepared by a professional this year, Beaton Accounting can help. All of our tax preparers are experienced tax professionals to ensure the accuracy of your filing and the maximization of your return.

Call us today for a FREE consultation!

631-921-6894

Have a question or certain topic you’d like to see addressed in our next blog post? Just leave a comment, or email us at [email protected]

The deadline to file your federal income tax return (April 17th) is fast approaching! We want you to be able to maximize your return, so here are a few last-minute tips on common tax credits you may be eligible for — and may be missing out on!

Four tax credits that will boost your federal income tax return:

1. The Earned Income Tax Credit

If you earn less than $49,078 in wages, are self-employed or a farmer, you are eligible to claim the earned income tax credit! With our hard-hit economy, millions more Americans have seen a drop in their wages and are not eligible for this tax credit, which could qualify you for a credit of up to $5,751 depending on your income, age and the number of qualifying children you have already claimed. Even if you don’t have children, you can still qualify for this credit! For more information, check out IRS Publication 596, Earned Income Credit.

2. The Child and Dependent Care Tax Credit

If you claim qualifying children under the age of 13, you are eligible to claim the child and dependent care tax credit to help cover the expenses you pay to care for your dependent. A disabled spouse and other qualifying dependents also make you eligible. To learn more, review IRS Publication 503, Child and Dependent Care Expenses.

3. The Child Tax Credit

You can claim a maximum tax credit of up to $1000 for each qualifying child IN ADDITION TO the child and dependent care tax credit. This could be a huge tax return boost if you qualify! To find out more, see IRS Publication 972, Child Tax Credit.

4. The Retirement Savings Contributions Credit

Also known as the “saver’s tax credit,” the retirement savings contributions tax credit helps low-to-moderate income workers save for retirement. If you contribute to an IRA or workplace retirement plan (like a 401k), you may qualify for this tax credit, which is actually claimable in addition to any other tax savings you may qualify for. To learn more, check out IRS Publication 590, Individual Retirement Arrangements (IRAs).

If you have any lingering questions on tax credits or how to maximize your tax return, or if you prefer to have your tax return prepared by a professional this year, Beaton Accounting can help. All of our tax preparers are experienced tax professionals to ensure the accuracy of your filing and the maximization of your return.

Call us today for a FREE consultation!

631-921-6894

Have a question or certain topic you’d like to see addressed in our next blog post? Just leave a comment, or email us at [email protected]

It’s easy to think of gifts as tax-free. In polite society, we don’t like to discuss the value of gifts. Don’t they just appear magically and bring happiness?

Not quite. All gifts, of course, do have a value, and depending on what that is, they may taxable.

The majority of gifts are not subject to the gift tax. Also, there is usually no tax for gifts to your spouse or a charity.

Most often, gifts are not taxable because they fall within the annual exclusion, which is $13,000 for 2011 and 2012.

You and your spouse can make a gift of up to $26,000 to a third party without paying a federal gift tax because it is considered that half of the gift is from you and half is from your spouse.

Gift tax returns do not need to be filed unless you give someone, other than your spouse, money or property worth more than the annual exclusion for that year.

And you generally don’t have to worry about any tax burdens being placed on the recipient of the gift. Most commonly, they do not have to pay federal gift tax or income tax on the value of the gift received.

Gifts do not ordinarily affect your federal income tax. Unless a gift is a charitable contribution, you cannot deduct the value of gifts you give.

To make things simple, here’s a quick summary of gifts that are not taxable:

• Gifts that do not exceed the annual exclusion for the calendar year
• Tuition or medical expenses paid directly to a medical or education institution on someone else’s behalf
• Gifts to your spouse
• Gifts to a political organization for its use
• Gifts to charities

You do have to file a gift tax return on Form 709 if any of the following apply:

• You gave gifts to at least one person (other than your spouse) that are more than the annual exclusion for the year.
• You and your spouse are splitting a gift.
• You gave someone (other than your spouse) a gift of a future interest that he or she cannot actually possess, enjoy or receive income from until some time in the future.
• You gave your spouse an interest in property that will terminate due to a future event

If you’d like to speak with a Beaton Accounting tax representative for professional advice on your taxes, call us today for a FREE consultation: 631-921-6894.

Have a question or certain topic you’d like to see addressed in our next blog post? Just leave a comment, or e-mail us at [email protected].

 

Every January 1^st it starts, the numerous ads for tax preparation services reminding us that by the end of the month we’ll have our tax forms and that we only have until April 15^th to file our taxes. So each year the question arises, do I do my own taxes or do I let a professional handle it? The answer is never simple and it always depends on what you want to gain from filing your taxes. Do you want it to be over and done with as soon as possible or do you want to get the most money possible? Do you want to learn more about the tax system on your own or is it just too complicated to care? Every person is different about what they want when it comes to filing taxes, so below are some benefits to both doing your own taxes or having a professional do it for you…

Easy come, easy go. As an American, the last 2 years brought us 2% of our paychecks back that we didn’t have in 2010 thanks to the “Payroll Tax Holiday” that gave us all a break of 2% on Social Security payroll taxes.

However, one expiring provision that was not given new life during the fiscal cliff deal – which extended the income tax rates for 99% of Americans – was this 2% reduction to an employee’s share of Social Security payroll taxes. For 2011 and 2012, employees paid only 4.2% of their wages towards Social Security. Beginning January 1, 2013, that burden has reverted back to 6.2%. As a result, if you earn a salary, you may have noticed that your first paycheck in 2013 was 2% lighter than your last check in 2012, assuming equal pay.