What You Need To Get Started

General Information

  • ___ Copy of Last Year’s Tax Return
  • ___ Dependents’ Names, birth dates and Social Security Numbers
  • ___ Copy of drivers license or state ID
  • ___ Child Care Expenses for Each Dependent
  • ___  Bank routing number
  • ___  Bank account number

Income

  • W-2 Form(s) Wages, Salaries, and Tips
  • Interest Income : Form 1099-INT & 1099-OID
  • Dividend Income : Form 1099-DIV
  • Sales of Stock, Land, Capital Gains: Form 1099-B
  • Sales of Real Estate: Form 1099-S
  • State Tax Refunds: Form 1099-G
  • Alimony Received or Paid
  • Unemployment Compensation 1099-G
  • Business Income: Form 1099-MISC
  • Retirement Income: Form 1099-R
  • Social Security Income Form SSA-1099
  • Rental Income and Expenses
  • Form K-1- Income from Partnerships, Trusts, and S-Corporations
  • Health Insurance Info

Tax Credits

  • Child Care Provider Address, Tax I.D. Number and Amounts Paid
  • Adoption Expense Information
  • First Time Home Buyer Tax Credit
  • Tuition & Education

Expenses and Tax Deductions

  • Medical Expenses for the Family
  • Medical Premiums Paid
  • Prescription Medicines and Drugs
  • Doctor and Dentist Payments
  • Home Mortgage Interest Form 1098
  • Real Estate Taxes Paid
  • Personal Property Taxes Paid
  • Charitable Cash Contributions
  • Fair Market Value of Non-cash Contributions to Charities
  • Unreimbursed Expenses Related to Volunteer Work
  • Mileage for Volunteer Purposes
  • Casualty and Theft Losses
  • Unreimbursed Expenses Related to Your Job
  • Miles Traveled Related to Your Job
  • Union and Professional Dues
  • Investment Expenses
  • Job-hunting Expenses
  • IRA Contributions
  • Student Loan Interest Paid
  • Moving Expenses
  • Last Year’s Tax Preparation Fee

Business Expenses

Deducting Business Expenses

Business expenses are the cost of carrying on a trade or business. These expenses are usually deductible if the business operates to make a profit.

 Publication 535, Business Expenses.

What Can I Deduct?

To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.

It is important to separate business expenses from the following expenses:

The expenses used to figure the cost of goods sold, capital expenses, and personal Expenses.

Cost of Goods Sold

If your business manufactures products or purchases them for resale, you generally must value inventory at the beginning and end of each tax year to determine your cost of goods sold. Some of your expenses may be included in figuring the cost of goods sold. The cost of goods sold is deducted from your gross receipts to figure your gross profit for the year. If you include an expense in the cost of goods sold, you cannot deduct it again as a business expense.

The following are types of expenses that go into figuring the cost of goods sold.

The cost of products or raw materials, including freight, storage, direct labor costs (including contributions to pensions or annuity plans) for workers who produce the products.

Overhead

Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for certain production or resale activities. Indirect costs include rent, interest, taxes, storage, purchasing, processing, repackaging, handling, and administrative costs.

This rule does not apply to personal property you acquire for resale if your average annual gross receipts (or those of your predecessor) for the preceding 3 tax years are not more than $10 million.

Cost of Goods Sold:  Publication 334, Tax Guide for Small Businesses and the chapter on Inventories, Publication 538, Accounting Periods and Methods.

Capital Expenses

You must capitalize, rather than deduct, some costs. These costs are a part of your investment in your business and are called capital expenses. Capital expenses are considered assets in your business. In general, there are three types of costs you capitalize.

Business start-up costs 

Business assets

Improvements

Personal versus Business Expenses

Generally, you cannot deduct personal, living, or family expenses. However, if you have an expense for something that is used partly for business and partly for personal purposes, divide the total cost between the business and personal parts. You can deduct the business part.

For example, if you borrow money and use 70{c0e7f07cfaeddd3f648f0ebab1b33889b5d0a20b91fce0991dd8939726770a69} of it for business and the other 30{c0e7f07cfaeddd3f648f0ebab1b33889b5d0a20b91fce0991dd8939726770a69} for a family vacation, you can deduct 70{c0e7f07cfaeddd3f648f0ebab1b33889b5d0a20b91fce0991dd8939726770a69} of the interest as a business expense. The remaining 30{c0e7f07cfaeddd3f648f0ebab1b33889b5d0a20b91fce0991dd8939726770a69} is personal interest and is not deductible. Refer to chapter 4 of Publication 535, Business Expenses, for information on deducting interest and the allocation rules.

Business Use of Your Home

If you use part of your home for business, you may be able to deduct expenses for the business use of your home. These expenses may include mortgage interest, insurance, utilities, repairs, and depreciation. Refer to Home Office Deduction and Publication 587, Business Use of Your Home, for more information.

Business Use of Your Car

If you use your car in your business, you can deduct car expenses. If you use your car for both business and personal purposes, you must divide your expenses based on actual mileage. Refer to Publication 463, Travel, Entertainment, Gift, and Car Expenses. For a list of current and prior year mileage rates see the Standard Mileage Rates.

Other Types of Business Expenses

Employees’ Pay – You can generally deduct the pay you give your employees for the services they perform for your business.

Retirement Plans – Retirement plans are savings plans that offer you tax advantages to set aside money for your own, and your employees’ retirement.

Rent Expense – Rent is any amount you pay for the use of property you do not own. In general, you can deduct rent as an expense only if the rent is for property you use in your trade or business.                                  If you have or will receive equity in or title to the property, the rent is not deductible.

Interest – Business interest expense is an amount charged for the use of money you borrowed for business activities.

Taxes – You can deduct various federal, state, local, and foreign taxes directly attributable to your trade or business as business expenses.

Insurance – Generally, you can deduct the ordinary and necessary cost of insurance as a business expense, if it is for your trade, business, or profession.

The Child Tax Credit, What You Need To Know

The Child Tax Credit is a tax credit that may save taxpayers up to $1,000 for each eligible qualifying child. Taxpayers should make sure they qualify before they claim it. Here are some facts from the IRS on the Child Tax Credit:

  1. Qualifications. For the Child Tax Credit, a qualifying child must pass several tests:
  • Age. The child must have been under age 17 on Dec. 31, 2017.
  • Relationship. The child must be the taxpayer’s son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half-brother or half-sister. The child may be a descendant of any of these individuals. A qualifying child could also include grandchildren, nieces or nephews. Taxpayers would always treat an adopted child as their own child. An adopted child includes a child lawfully placed with them for legal adoption.
  • Support. The child must have not provided more than half of their own support for the year.
  • Dependent. The child must be a dependent that a taxpayer claims on their federal tax return.
  • Joint return. The child cannot file a joint return for the year, unless the only reason they are filing is to claim a refund.
  • Citizenship. The child must be a U.S. citizen, a U.S. national or a U.S. resident alien.
  • Residence. In most cases, the child must have lived with the taxpayer for more than half of 2017.
  1. Limitations. The Child Tax Credit is subject to income limitations. The limits may reduce or eliminate a taxpayer’s credit depending on their filing status and income.
  2. Additional Child Tax Credit.  If a taxpayer qualifies and gets less than the full Child Tax Credit, they could receive a refund, even if they owe no tax, with the Additional Child Tax Credit.

Because of a new tax-law change, the IRS cannot issue refunds before Feb. 15 for tax returns that claim the Earned Income Tax Credit (EITC) or the ACTC. This applies to the entire refund, even the portion not associated with these credits. The IRS will begin to release EITC/ACTC refunds starting Feb. 15. More information on the Earned Income Credit.

The Child and Dependent Care Tax Credit

The Child and Dependent Care Tax Credit

Many parents send their children to summer camps while they work or look for work.  Eligible taxpayers may be able claim it on their taxes in 2018 through the Child and Dependent Tax Credit if they paid for day camp or for someone to care for a child, dependent or spouse during 2017.

 

Some Facts You Should Know

  1. Qualifying Person. The care must have been for “qualifying persons.” A qualifying person can be a child under age 13. A qualifying person can also be a spouse or dependent who lived with the taxpayer for more than half the year and is physically or mentally incapable of self-care.
  2. Work-Related Expenses. The care must have been necessary so the taxpayer could work or look for work. For those who are married, the care also must have been necessary so a spouse could work or look for work. This rule does not apply if the spouse was disabled or a full-time student.
  3. Earned Income. The taxpayer — and their spouse if married filing jointly — must have earned income for the tax year. Special rules apply to a spouse who is a student or disabled.
  4. Credit Percentage/Expense Limits. The credit is worth between 20 and 35 percent of allowable expenses. The percentage depends on the income amount. Allowable expenses are limited to $3,000 for care of one qualifying person. The limit is $6,000 if the taxpayer paid for the care of two or more.
  5. Care Provider Information. The name, address and taxpayer identification number of the care provider must be included on the return. The childcare provider cannot be the taxpayer’s spouse, dependent or the child’s parent.
  6. Dependent Care Benefits. Special rules apply for people who get dependent care benefits from their employer. See Form 2441, Child and Dependent Care Expenses, has more on these rules. File the form with a tax return.
  7. Special Circumstances. Since every family is different, the IRS has a series of exceptions to the rules in the qualification process. These exceptions allow a greater number of families to take advantage of the credit. For more information, see IRS Publication 503, Child and Dependent Care Expenses.

Even if the child care provider is a sitter in the home, taxpayers may qualify for the credit. Taxpayers who pay someone to come to their home and care for their dependent or spouse may be a household employer. More information can be found on the Child & Dependent Credit.

Some Tax Benefits You Should know For 2017

In 2017, Some Tax Benefits Increase Slightly Due to Inflation 

The Internal Revenue Service today announced 2017 annual inflation increases for some tax benefits for more than 50 tax provisions, including the tax rate schedules among other tax changes. The tax year 2017 adjustments generally are used on tax returns filed in 2018.   The tax items for tax year 2017 of greatest interest to most taxpayers include the following dollar amounts:

    • The standard deduction for married filing jointly rises to $12,700 for tax year 2017, up $100 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction rises to $6,350 in 2017, up from $6,300 in 2016, and for heads of households, the standard deduction will be $9,350 for tax year 2017, up from $9,300 for tax year 2016.
    • The personal exemption for tax year 2017 remains as it was for 2016: $4,050.  However, the exemption is subject to a phase-out that begins with adjusted gross incomes of $261,500 ($313,800 for married couples filing jointly). It phases out completely at $384,000 ($436,300 for married couples filing jointly.)
    • For tax year 2017, the 39.6 percent tax rate affects single taxpayers whose income exceeds $418,400 ($470,700 for married taxpayers filing jointly), up from $415,050 and $466,950, respectively. The other marginal rates – 10, 15, 25, 28, 33 and 35 percent – and the related income tax thresholds for tax year 2017 are described in the revenue procedure.
    • The limitation for itemized deductions to be claimed on tax year 2017 returns of individuals begins with incomes of $287,650 or more ($313,800 for married couples filing jointly).
    • The Alternative Minimum Tax exemption amount for tax year 2017 is $54,300 and begins to phase out at $120,700 ($84,500, for married couples filing jointly for whom the exemption begins to phase out at $160,900). The 2016 exemption amount was $53,900 ($83,800 for married couples filing jointly).  For tax year 2017, the 28 percent tax rate applies to taxpayers with taxable incomes above $187,800 ($93,900 for married individuals filing separately).
    • The tax year 2017 maximum Earned Income Credit amount is $6,318 for taxpayers filing jointly who have 3 or more qualifying children, up from a total of $6,269 for tax year 2016. The revenue procedure has a table providing maximum credit amounts for other categories, income thresholds and phase-outs.
    • For tax year 2017, the monthly limitation for the qualified transportation fringe benefit is $255, as is the monthly limitation for qualified parking,
    • For calendar year 2017, the dollar amount used to determine the penalty for not maintaining minimum essential health coverage is $695.
    • For tax year 2017 participants who have self-only coverage in a Medical Savings Account, the plan must have an annual deductible that is not less than $2,250 but not more than $3,350; these amounts remain unchanged from 2016. For self-only coverage the maximum out of pocket expense amount  is $4,500, up $50 from 2016. For tax year 2017 participants with family coverage, the floor for the annual deductible is $4,500, up from $4,450 in 2016, however the deductible cannot be more than $6,750, up $50 from the limit for tax year 2016. For family coverage, the out of pocket expense limit is $8,250 for tax year 2017, an increase of $100 from  tax year 2016.
    • For tax year 2017, the adjusted gross income amount used by joint filers to determine the reduction in the Lifetime Learning Credit is $112,000, up from $111,000 for tax year 2016.
    • For tax year 2017, the foreign earned income exclusion is $102,100, up from $101,300 for tax year 2016.
  • Estates of decedents who die during 2017 have a basic exclusion amount of $5,490,000, up from a total of $5,450,000 for estates of decedents who died in 2016.

Don’t Fall for Scam Calls and Emails Posing as the IRS

How to tell if it’s a scam posing as the IRS

don't fall for sams

Scams continue to use the IRS as a lure. These tax scams take many different forms. The most common scams are phone calls and emails from thieves who pretend to be from the IRS. Scammers use the IRS name, logo or a fake website to try and steal money from taxpayers. Identity theft can also happen with these scams, don’t fall for scam calls and emails posing as the IRS.

Taxpayers need to be wary of phone calls or automated messages from someone who claims to be from the IRS. Often these criminals will say the taxpayer owes money. They also demand payment right away. Scammers will lie to a taxpayer and say they are due a refund. The thieves ask for bank account information over the phone.

The IRS warns taxpayers not to fall for these scams.

IRS employees will NOT

  • Call demanding immediate payment. The IRS will not call a taxpayer if they owe tax without first sending a bill in the mail.
  • Demand payment without allowing the taxpayer to question or appeal the amount owed.
  • Require the taxpayer pay their taxes a certain way. For example, demand taxpayers use a prepaid debit card.
  • Ask for credit or debit card numbers over the phone.
  • Threaten to contact local police or similar agencies to arrest the taxpayer for non-payment of taxes.
  • Threaten legal action such as a lawsuit.

If a taxpayer doesn’t owe or think they owe any tax, they should:

  • Contact the Treasury Inspector General. Use  “IRS Impersonation Scam Reporting” web page to report the incident.
  • Report to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” to the comments of your report.

In most cases, an IRS phishing scam is an unsolicited, bogus email that claims to come from the IRS. Criminals 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.

For those taxpayers who 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 phishing@irs.gov. Then delete it.
  • Do not open any attachments or click on any links. They may have malicious code that will infect your computer.

HOW TO TAKE CARE OF YOUR HEALTH, AND FINANCES

It’s that time again, when taxes are starting to start to, arghh, stress us out. So we are  paying attention to what is needed in order to get our taxes in order and completed.

Once we do that, oh yes, we take a breath and know we no longer have to think about them. Happy dance!

And it’s also a great reminder of making sure we are paying as much attention to our physical health too.

 

I was thinking that knowing our fiscal health is on the right path, is also a factor in our general health  too, isn’t it?

Because when our finances are no longer a worry, we feel stronger and less stressed, right?

So are we paying as much attention to our physical health? Are we ready to do both?

For instance, are we being totally aware of what our bodies are telling us? When we are tired, are we taking that moment to rest? When we feel stressed do we take time to just breathe?  Do we take time out of our busy schedules to really check in with ourselves?

And if we do take that moment, most importantly do we choose to listen and then act?

I don’t know about you, but I used to think I could just push through this. But, well, we all know what happens when we do that.

I learned really quickly that if I ignored my body’s needs, it would force me to take an unscheduled break. I mean how many times can you get the flu before you realize the Universe is trying to tell us something?

So now, I fully accept it is in my realm of choice. Wow, that means I am truly “adulting.” I like that word. It means we are being adult and taking full responsibility.

I have now fully agreed  to learn to listen and then act accordingly.

As one who has come back from a very serious illness, I had to learn to listen. I was not given an option.

This choice to be fully aware of all our layers is living in conscious awareness. It means we are consciously choosing each step of the way to make decisions that are in our best interest.

And then, most importantly, following that choice.

I have to admit,  that is totally empowering! Because we are no longer feeling that our body is something we just ignore or have to drag around with us.

So I cannot just say, my body is tired and keep on working. In conscious awareness, I honor my body. I stop what I am doing and rest. Even if it’s just a 10 minute catnap.

If I am feeling stressed, it is the perfect time to do some deep breathing  and meditating.  It completely restores my body to an invigorated space.  And it does not take much time out of my day. But the rewards are amazing.

I know you are in great hands with your finances with Loor Accounting. So do indeed contact them for your financial needs.

Make sure your body is in great hands also. It is the only house we truly have.

And when we acknowledge it is our sacred vehicle, and treat it as such, we will be in glowing all around health.

So what did you do for your body and finances today?

In peace and gratitude,

Ariel is a believer in YES WE CAN. Having taught herself to walk after being told she would never walk again. She is thriving, walking, and even driving! And now she is the founder of Success-full-living.com. A site dedicated to knowing that our inner strength and our love is our soul’s purpose.
She believes that living in heart-centric moments is what propels an amazing vibrant life. So do join her on this journey!

Founder, success-full-living.com, living one heart-centric moment at a time.