Tax & Notary - Topics of Interest

Tax School: Seven Facts about the Expanded Adoption Credit

You may be able to take a tax credit of up to $13,360 for qualified expenses paid to adopt an eligible child. The Affordable Care Act increased the amount of the credit and made it refundable, which means it can increase the amount of your refund.

Here are seven things the IRS wants you to know about the expanded adoption credit.

1. Beginning in tax year 2011 the credit is refundable, meaning that you can get it even if you owe no tax.
2. For tax year 2011 you must file a paper tax return and Form 8839, Qualified Adoption Expenses, to get the credit and you must attach documents supporting the adoption.
3. Documents may include a final adoption decree, placement agreement from an authorized agency, court documents and the state’s determination for special needs children.
4. Qualified adoption expenses are reasonable and necessary expenses directly related to the legal adoption of the child. These expenses may include adoption fees, court costs, attorney fees and travel expenses..
5. An eligible child must be under 18 years old, or physically or mentally incapable of caring for himself or herself.
6. Families with a federal modified adjusted gross income above $225,210 cannot claim the credit; families with incomes above $185,210 can claim part credit. Anyone with incomes below the lower amount should be able to claim the full credit. (Adoptions from previous years had different income limits.)
7. Taxpayers claiming the credit will still be able to use IRS Free File to prepare their returns, but the returns must be printed and mailed to the IRS, along with all required documentation.

WANT TO LEARN MORE?

Platinum Professional Services offers an IRS Registered Tax Return Preparer Course to provide you with the tax knowledge needed to pass the IRS Registered Tax Preparer Competency Test and become an IRS Registered Tax Return Preparer RTRP.   Platinum is also proud to offer IRS Continuing Professional Education CPE courses to fulfill the annual 15 hour requirement for IRS Registered Tax Return Preparers.  In California or Oregon?  Platinum is an approved provider to offer the CTEC Registered Tax Preparer Qualifying Course as well as the Oregon Licensed Tax Preparer Course.

 

Tax School 101: Six Important Facts about Dependents and Exemptions

Some tax rules affect every person who may have to file a federal income tax return – these rules include dependents and exemptions. Here are six important facts the IRS wants you to know about dependents and exemptions that will help you file your 2011 tax return.

Exemptions reduce your taxable income. There are two types of exemptions: personal exemptions and exemptions for dependents. For each exemption you can deduct $3,700 on your 2011 tax return.
Your spouse is never considered your dependent. On a joint return, you may claim one exemption for yourself and one for your spouse. If you’re filing a separate return, you may claim the exemption for your spouse only if they had no gross income, are not filing a joint return, and were not the dependent of another taxpayer.
Exemptions for dependents. You generally can take an exemption for each of your dependents. A dependent is your qualifying child or qualifying relative. You must list the social security number of any dependent for whom you claim an exemption.
If someone else claims you as a dependent, you may still be required to file your own tax return. Whether you must file a return depends on several factors including the amount of your unearned, earned or gross income, your marital status, any special taxes you owe and any advance Earned Income Tax Credit payments you received.
If you are a dependent, you may not claim an exemption. If someone else – such as your parent – claims you as a dependent, you may not claim your personal exemption on your own tax return.
Some people cannot be claimed as your dependent. Generally, you may not claim a married person as a dependent if they file a joint return with their spouse. Also, to claim someone as a dependent, that person 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. There is an exception to this rule for certain adopted children. See IRS Publication 501, Exemptions, Standard Deduction, and Filing Information for additional tests to determine who can be claimed as a dependent.
For more information on exemptions, dependents and whether you or your dependent needs to file a tax return, see IRS Publication 501. The publication is available at http://www.irs.gov or can be ordered by calling 800-TAX-FORM (800-829-3676). You can also use the Interactive Tax Assistant at http://www.irs.gov to determine who you can claim as a dependent and how much you can deduct for each exemption you claim. The ITA tool is a tax law resource on the IRS website that takes you through a series of questions and provides you with responses to tax law questions.

WANT TO LEARN MORE?

Platinum Professional Services offers an IRS Registered Tax Return Preparer Course to provide you with the tax knowledge needed to pass the IRS Registered Tax Preparer Competency Test and become an IRS Registered Tax Return Preparer RTRP.   Platinum is also proud to offer IRS Continuing Professional Education CPE courses to fulfill the annual 15 hour requirement for IRS Registered Tax Return Preparers.  In California or Oregon?  Platinum is an approved provider to offer the CTEC Registered Tax Preparer Qualifying Course as well as the Oregon Licensed Tax Preparer Course.

 

Tax School 101: Ten Important Facts About Capital Gains and Losses

Did you know that almost everything you own and use for personal or investment purposes is a capital asset? Capital assets include a home, household furnishings and stocks and bonds held in a personal account. When a capital asset is sold, the difference between the amount you paid for the asset and the amount you sold it for is a capital gain or capital loss.

Here are ten facts from the IRS about gains and losses and how they can affect your Federal income tax return.

1. Almost everything you own and use for personal purposes, pleasure or investment is a capital asset.
2. When you sell a capital asset, the difference between the amount you sell it for and your basis – which is usually what you paid for it – is a capital gain or a capital loss.
3. You must report all capital gains.
4. You may deduct capital losses only on investment property, not on property held for personal use.
5. Capital gains and losses are classified as long-term or short-term, depending on how long you hold the property before you sell it. If you hold it more than one year, your capital gain or loss is long-term. If you hold it one year or less, your capital gain or loss is short-term.
6. If you have long-term gains in excess of your long-term losses, you have a net capital gain to the extent your net long-term capital gain is more than your net short-term capital loss, if any.
7. The tax rates that apply to net capital gain are generally lower than the tax rates that apply to other income. For 2011, the maximum capital gains rate for most people is 15%. For lower-income individuals, the rate may be 0% on some or all of the net capital gain. Special types of net capital gain can be taxed at 25% or 28%.
8. If your capital losses exceed your capital gains, the excess can be deducted on your tax return and used to reduce other income, such as wages, up to an annual limit of $3,000, or $1,500 if you are married filing separately.
9. If your total net capital loss is more than the yearly limit on capital loss deductions, you can carry over the unused part to the next year and treat it as if you incurred it in that next year.
10. In most cases, you must report capital gains and losses on new form 8949. Then you report certain totals from that form on Schedule D (Form 1040).

WANT TO LEARN MORE?

Platinum Professional Services offers an IRS Registered Tax Return Preparer Course to provide you with the tax knowledge needed to pass the IRS Registered Tax Preparer Competency Test and become an IRS Registered Tax Return Preparer RTRP.   Platinum is also proud to offer IRS Continuing Professional Education CPE courses to fulfill the annual 15 hour requirement for IRS Registered Tax Return Preparers.  In California or Oregon?  Platinum is an approved provider to offer the CTEC Registered Tax Preparer Qualifying Course as well as the Oregon Licensed Tax Preparer Course.

 

The IRS has IRS2Go for your Smartphone

The Internal Revenue Service has IRS2Go, its first smartphone application that lets taxpayers check on their status of their tax refund and obtain helpful tax information.

Tax Help for Small Businesses and Self-Employed

The IRS Small Business and Self-Employed Tax Center at https://xxxwww.irs.gov/smallbiz offers extensive resources and online tools designed to help small businesses and self-employed persons.

• Small business forms and publications
• Employer Identification Number online application
• Employment tax information – federal income tax, Social Security and Medicare taxes, FUTA and self-employment tax
• Tax-related news that could affect your business
• Small business educational events
• IRS videos for small businesses
• A-Z Index for Business – find information fast using the A-Z listing
The site provides important tax information available for all stages of owning a business.

WANT TO LEARN MORE?

Platinum Professional Services offers an IRS Registered Tax Return Preparer Course to provide you with the tax knowledge needed to pass the IRS Registered Tax Preparer Competency Test and become an IRS Registered Tax Return Preparer RTRP.   Platinum is also proud to offer IRS Continuing Professional Education CPE courses to fulfill the annual 15 hour requirement for IRS Registered Tax Return Preparers.  In California or Oregon?  Platinum is an approved provider to offer theCTEC Registered Tax Preparer Qualifying Course as well as the Oregon Licensed Tax Preparer Course.

 

 

Tax School 101: Ten Tax Benefits for Parents

Did you know that your children may help you qualify for some tax benefits? Here are 10 tax benefits the IRS wants parents to consider when filing their tax returns this year:

Dependents In most cases, a child can be claimed as a dependent in the year they were born.

Child Tax Credit - You may be able to take this credit on your tax return for each of your children under age 17. If you do not benefit from the full amount of the Child Tax Credit, you may be eligible for the Additional Child Tax Credit.

Child and Dependent Care Credit - You may be able to claim the credit if you pay someone to care for your child under age 13 so that you can work or look for work.

Earned Income Tax Credit - The EITC is a benefit for certain people who work and have earned income from wages, self-employment or farming. EITC reduces the amount of tax you owe and may also give you a refund.

Adoption Credit - You may be able to take a tax credit for qualifying expenses paid to adopt an eligible child. Taxpayers claiming the adoption credit must file a paper tax return because adoption-related documentation must be included.

Children with Earned Income - If your child has income earned from working they may be required to file a tax return. For more information see IRS Publication 501.

Children with Investment Income - Under certain circumstances a child’s investment income may be taxed at the parent’s tax rate.

Higher Education Credits Education tax credits can help offset the costs of education. The American Opportunity and the Lifetime Learning Credit are education credits that reduce your federal income tax dollar-for-dollar, unlike a deduction, which reduces your taxable income.

Student loan Interest - You may be able to deduct interest you pay on a qualified student loan. The deduction is claimed as an adjustment to income so you do not need to itemize your deductions.

Self-employed health insurance deduction If you were self-employed and paid for health insurance, you may be able to deduct any premiums you paid for coverage for any child of yours who was under age 27 at the end of 2011, even if the child was not your dependent.

WANT TO LEARN MORE?

Platinum Professional Services offers an IRS Registered Tax Return Preparer Course to provide you with the tax knowledge needed to pass the IRS Registered Tax Preparer Competency Test and become an IRS Registered Tax Return Preparer RTRP.   Platinum is also proud to offer IRS Continuing Professional Education CPE courses to fulfill the annual 15 hour requirement for IRS Registered Tax Return Preparers.  In California or Oregon?  Platinum is an approved provider to offer theCTEC Registered Tax Preparer Qualifying Course as well as the Oregon Licensed Tax Preparer Course.

 

Platinum Tax School announces Oregon Basic Tax Course - 80 hours

Have you thought of becoming an Oregon Licensed Tax Preparer?  Platinum now offers you a way to meet your initial education requirement as established by the Oregon State Board of Tax Practitioners, with the successful completion of our course (minimum passing score of 75% or better is required).

This tax course provides 80 hours of education credit and will prepare you for the tax preparer examination administered by the Oregon Board of Tax Practitioners (OBTP).
This course covers form 1040 and related schedules and forms. Topics include income, gains and losses, standard and itemized deductions, tax credits, Oregon state taxes and mini tax problems.   

For more information visit our website PlatinumProStudies.com

Tax School 101: Tax Tips for Self-employed Individuals

If you are in business for yourself, or carry on a trade or business as a sole proprietor or an independent contractor, you generally would consider yourself self-employed and you would file IRS Schedule C, Profit or Loss From Business or Schedule C-EZ, Net Profit From Business with your Form 1040.

Here are fives things the IRS wants you to know about self-employment:

Self-employment can include work in addition to your regular full-time business activities, such as part-time work you do at home or in addition to your regular job.

If you are self-employed you generally have to pay Self-employment Tax. Self-employment tax is a social security and Medicare tax primarily for individuals who work for themselves. It is similar to the social security and Medicare taxes withheld from the pay of most wage earners. You figure SE tax yourself using a Form 1040 Schedule SE. Also, you can deduct half of your self-employment tax in figuring your adjusted gross income.

If you are self-employed you generally have to make estimated tax payments. This applies even if you also have a full-time or part-time job and your employer withholds taxes from your wages. Estimated tax is the method used to pay tax on income that is not subject to withholding. If you don’t make quarterly payments you may be penalized for underpayment at the end of the tax year.

You can deduct the costs of running your business. These costs are known as business expenses. These are costs you do not have to capitalize or include in the cost of goods sold but can deduct in the current year.

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

WANT TO LEARN MORE?

Platinum Professional Services offers an IRS Registered Tax Return Preparer Course to provide you with the tax knowledge needed to pass the IRS Registered Tax Preparer Competency Test and become an IRS Registered Tax Return Preparer RTRP.   Platinum is also proud to offer IRS Continuing Professional Education CPE courses to fulfill the annual 15 hour requirement for IRS Registered Tax Return Preparers.  In California or Oregon?  Platinum is an approved provider to offer the CTEC Registered Tax Preparer Qualifying Course as well as the Oregon Licensed Tax Preparer Course.

 

Tax School 101: Two Tax Credits to Help Pay Higher Education Costs

Two Tax Credits to Help Pay Higher Education Costs

There are two federal tax credits available to help you offset the costs of higher education for yourself or your dependents. These are the American Opportunity Credit and the Lifetime Learning Credit.

To qualify for either credit, you must pay postsecondary tuition and fees for yourself, your spouse or your dependent. The credit may be claimed by the parent or the student, but not by both. If the student was claimed as a dependent, the student cannot file for the credit.

For each student, you can choose to claim only one of the credits in a single tax year. You cannot claim the American Opportunity Credit to pay for part of your daughter's tuition charges and then claim the Lifetime Learning Credit for $2,000 more of her school costs.

However, if you pay college expenses for two or more students in the same year, you can choose to take credits on a per-student, per-year basis. You can claim the American Opportunity Credit for your sophomore daughter and the Lifetime Learning Credit for your senior son.

Here are some key facts the IRS wants you to know about these valuable education credits:

1. The American Opportunity Credit

The credit can be up to $2,500 per eligible student.
It is available for the first four years of post-secondary education.
Forty percent of the credit is refundable, which means that you may be able to receive up to $1,000, even if you owe no taxes.
The student must be pursuing an undergraduate degree or other recognized educational credential.
The student must be enrolled at least half time for at least one academic period.
Qualified expenses include tuition and fees, coursed related books supplies and equipment.
The full credit is generally available to eligible taxpayers who make less than $80,000 or $160,000 for married couples filing a joint return.
2. Lifetime Learning Credit

The credit can be up to $2,000 per eligible student.
It is available for all years of postsecondary education and for courses to acquire or improve job skills.
The maximum credited is limited to the amount of tax you must pay on your return.
The student does not need to be pursuing a degree or other recognized education credential.
Qualified expenses include tuition and fees, course related books, supplies and equipment.
The full credit is generally available to eligible taxpayers who make less than $60,000 or $120,000 for married couples filing a joint return.
You cannot claim the tuition and fees tax deduction in the same year that you claim the American Opportunity Tax Credit or the Lifetime Learning Credit. You must choose to either take the credit or the deduction and should consider which is more beneficial for you.

For more information about these credits see IRS Publication 970, Tax Benefits for Education available at http://www.irs.gov or by calling the IRS forms and publications order line at 800-TAX-FORM (800-829-3676)

WANT TO LEARN MORE?

Platinum Professional Services offers an IRS Registered Tax Return Preparer Course to provide you with the tax knowledge needed to pass the IRS Registered Tax Preparer Competency Test and become an IRS Registered Tax Return Preparer RTRP.   Platinum is also proud to offer IRS Continuing Professional Education CPE courses to fulfill the annual 15 hour requirement for IRS Registered Tax Return Preparers.  In California or Oregon?  Platinum is an approved provider to offer the CTEC Registered Tax Preparer Qualifying Course as well as the Oregon Licensed Tax Preparer Course.

 

Tax School 101: Four Tax Tips about Tip Income

If you work in an occupation where tips are part of your total compensation, you need to be aware of several facts relating to your federal income taxes. Here are four things the IRS wants you to know about tip income:

1.Tips are taxable. Tips are subject to federal income, Social Security and Medicare taxes. The value of non–cash tips, such as tickets, passes or other items of value, is also income and subject to tax.
2.Include tips on your tax return. You must include in gross income all cash tips you receive directly from customers, tips added to credit cards, and your share of any tips you receive under a tip–splitting arrangement with fellow employees.
3.Report tips to your employer. If you receive $20 or more in tips in any one month, you should report all of your tips to your employer. Your employer is required to withhold federal income, Social Security and Medicare taxes.
4.Keep a running daily log of your tip income. You can use IRS Publication 1244, Employee's Daily Record of Tips and Report to Employer, to record your tip income.

WANT TO LEARN MORE?

Platinum Professional Services offers an IRS Registered Tax Return Preparer Course to provide you with the tax knowledge needed to pass the IRS Registered Tax Preparer Competency Test and become an IRS Registered Tax Return Preparer RTRP.   Platinum is also proud to offer IRS Continuing Professional Education CPE courses to fulfill the annual 15 hour requirement for IRS Registered Tax Return Preparers.  In California or Oregon?  Platinum is an approved provider to offer the CTEC Registered Tax Preparer Qualifying Course as well as the Oregon Licensed Tax Preparer Course.