Working parents can save on their taxes through the child-care tax credit or by using a flexible spending account. Do the math to see which works better for you.
This post is by Bill Bischoff of MarketWatch.com.
You may have to pay child-care expenses for your kids so you can work. Thankfully, a federal income tax credit can help pay the bills. It’s available to all eligible parents regardless of income, although lower-income folks get bigger credits. Also, your employer might offer a child-care flexible spending account (FSA). When the FSA deal is available, it can offer even more tax savings than the credit.
Here’s what you need to know about both breaks.
The credit can only be claimed for child-care expenses so you can work. If you’re married and file jointly, you can generally claim the credit only if your spouse also works or goes to school full-time for at least five months during the year.
You don't have to be a big-time venture capitalist to take advantage of favorable tax treatment for investments ranging from real estate to stocks.
This post is by Kathy Kristof at Kiplinger’s Personal Finance magazine.
Yet, during tax season, it's helpful to review all the breaks you can take -- even if you missed them in 2012. They may help trim your tax bill in the future.
Some of the tastiest tax treats were originally designed for a rarefied clientele: venture capitalists and multimillionaire "angel" investors, who make a living finding and financing small companies. But new rules allowing corporate "crowd funding" arrangements may make these tax rules far more pertinent to average investors who might become tempted to help finance a friend's or neighbor's new enterprise.
Be sure to verify everything your tax preparer filled in on the forms, because you'll be held responsible. You also want to double-check names and numbers.
This post is by Eva Rosenberg at MarketWatch.com.
Did you find a tax pro who swears she can get you better refunds than anyone else in the world? Do all her clients get great refunds, and you can’t figure out why you and your accountant can’t get the same result? Is she smarter than everyone?
There might be another reason she can do this. She may be committing tax fraud. But what happens when your tax preparer commits tax fraud? You get into trouble.
Consider the case of someone who is being audited because her tax preparer took deductions for business expenses. She can’t provide receipts for those expenses because she doesn’t have a business -- or any such expenses. She is rightfully nervous. By the time the IRS gets done with her, she will owe the taxes on those fraudulent expenses, several types of penalties and interest on the whole shebang.
The first thing you need to know about any tax return you sign are these words that appear over your signature:
"Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge."
It's not too late to put money in an IRA, organize your records and make sure you're claiming all the deductions you can. But don't wait until April 15.
This post is by Kelley Holland of CNBC.
If you are among the millions of Americans who file tax returns later in the game -- perhaps you've been busy getting that root canal -- it's time to start looking for moves you can make to reduce your tax bill.
"Once December 31 comes and goes, there are not a lot of action items" to save on taxes, says Jackie Perlman, principal tax analyst at the Tax Institute at H&R Block. "But there are some things to consider."
Gambling winnings are considered taxable income, though you can write off losses up to the amount you won.
This post is by Kay Bell at Bankrate.com.
Here's a look at the federal tax forms you'll need to share your good fortune with the Internal Revenue Service. And if you lost a few rounds before your numbers came up, there's a way you can turn those losses to your tax advantage.
For recreational gamblers, requirements for reporting and withholding from a winning bet depend on the type of gambling, the amount won and the ratio of the winnings to the wager.
If you got married or divorced, took in an elderly parent, lost your job or adopted a child, you may need to adjust your tax planning.
This post is by Laura Saunders of The Wall Street Journal.
What was new in your life last year? Did you get married or divorced, or adopt a child? Did your parents move in — or your adult child? Did you lose a house to a storm?
These and other major events often have tax consequences people are unaware of — precisely because they are unusual, unlike, say, deducting donations. And with big tax increases taking effect this year, it is all the more important for taxpayers to seize any break they can.
Make sure you take all the deductions and credits to which you're entitled. That requires keeping up with changes in the laws.
This post is by Richard Satran of U.S. News & World Report.
Accountants say their clients often have a higher standard than the IRS requires. Some people will not itemize an expense when they cannot find a receipt, for example, even though not every tax deduction requires one. Estimates that conform to a "reasonable" standard are often adequate although some, like charitable deductions, must conform to a higher one.
Of course people are afraid of an IRS audit. But according to the 2012 Survey of Taxpayer Attitudes from the IRS Oversight Board, 86% say it's "personal integrity" that motivates them to be honest, and just 40% say they file faithfully out of fear of being caught doing something wrong.
Before you buy a tax software package, make sure it suits your needs -- and that you're not eligible to use free online filing programs.
This post is by Kay Bell of Bankrate.com.
Are you prepared to spend almost a full day filling out your tax return? And we're talking a 24-hour period, not a standard eight-hour work day. That's the Internal Revenue Service's estimate of how long it will take the average taxpayer to complete Form 1040.
Sure, that includes the time it takes to pull together and sort through all your tax receipts and records, learn about the Form1040, decipher its instructions, copy the completed form and send it in. But even discounting these ancillary duties, the IRS figures it still will take more than five hours just to fill out this most popular income tax return.
If you have additional schedules or tax credits to file, you might be measuring your tax time by the calendar instead of the clock.
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