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Tax Tips

Let the Certified professionals at Dwyer Lodha & Associates be your main resource for your specific tax issues and IRS tax information. Don’t give the IRS more than their fair share. Take advantage of our tax preparers’ experience.


Dependents

A dependent must be either a “qualifying child” or a “qualifying relative.” You are allowed one exemption for each person you can claim as a dependent.


Filing Status

Single, married filing jointly, married filing separately, head of household…all these and more explained.


Individual Retirement Arrangement (IRA)

No contributions are allowed to a traditional IRA in and after the year you turn age 70 1/2. At that age, there is a required minimum distribution (RMD) that must be withdrawn each year.


Life changes have tax consequences, from birth through death

During your lifetime, you may get a job, go to school, get married, start a business, change jobs, have children, send children to college, buy and/or sell a home, get divorced, contribute to a retirement plan, or draw money out of a retirement plan.

 

  • New Marriages – If you are married as of December 31st of a year, you are considered married for the whole year. Your filing status depends on your marital status.
  • Births – Your child born on December 31 is assumed, for tax purposes, to have lived with you the entire year. For each qualifying child, you can claim a dependent’s exemption of $3,700.
  • Deaths – The same filing requirements that apply to individuals determine if a final income tax return must be filed for the decedent. Divorce – If you are divorced or legally separated as of December 31, for tax purposes you are considered to be unmarried for the entire year.
  • College Attendance – The American Opportunity Credit is available again in 2011 for taxpayers claiming higher education costs including required course materials. The credit will allow the taxpayer to claim up to $2,500 of the cost of college tuition and related expenses. Forty percent of that credit will be refundable. The lifetime learning credit gives a credit of 20% of qualified educational expenses not exceeding $10,000, for a maximum credit of $2,000. Unlike the American Opportunity Credit, the Lifetime Learning Credit is available to graduate students and covers up to 20 percent of out-of-pocket expenses up to $10,000, for a maximum amount of $2,000.
  • New Job – If job expenses are incurred and not reimbursed by your employer, you may be able to claim them as employee business expenses.
  • Retirement – Pensions and annuities are generally taxable when distributed. You must start withdrawing from a traditional IRA by April 1 of the year following the year you reach age 70 1/2.
  • Owning A Home – Points paid when you purchase your home are generally deductible in that year. Mortgage interest and real estate taxes paid on your home are deductible.

 


Rental Income & Expenses

Owning rental property is often a good way to increase your net worth.


Taxable VS Nontaxable Income

Knowing how to report it properly helps reduce the tax liability.


Maximum Credit Amounts

The maximum amount of credit for Tax Year 2018 is:

·         $6,444 with three or more qualifying children

·         $5,728 with two qualifying children

·         $3,468 with one qualifying child

·         $520 with no qualifying children

For Tax Year 2017, the EITC phases out entirely (is not available) for taxpayers with an adjusted gross income of:

  • $15,010 with no Qualifying Children ($20,600 if married filing jointly)
  • $39,617 with one Qualifying Child ($45,207 if married filing jointly)
  • $45,007 with two Qualifying Children ($50,597 if married filing jointly)
  • $48,340 with three or more Qualifying Children ($53,930 if married filing jointly)

 


How to Avoid Common Problems

Mathematical errors, forgetting to sign your return and more.


Mileage Deductions

Keep track of your deductible mileage on your vehicle and you could see big savings on your tax return. Remember that you MUST keep accurate records in order for the deductions to be allowed.


What Should You Bring To Your Tax Interview?

Personal information for each family member, income and tax information, deductions and credits.


Deductions

Most taxpayers have a choice of either taking a standard deduction or itemizing their deductions.

Avoid paying more tax than necessary. Your Liberty Tax professional will probe to make sure that you claim all the tax deductions that you are eligible to claim.


Tax Changes

There’s nothing as certain as an ever-changing tax code. Besides the usual increases in exemption amounts, standard deductions, and qualifying income levels for the earned income credit, there are several impactful changes for filing Tax Year 2011 returns.