Do you use your personal vehicle for work purposes?
If you drive your personal car to and from job-related destinations, you qualify to deduct the miles driven off of your taxes. For example, driving to a sales meeting, going to buy office equipment, or going to the airport would count as a write off. At a minimum, for each trip, you should keep records of the destination, the number of miles driven, and the business-purpose of the trip. You can deduct 53.5 cents for each mile driven for business for the 2017 tax season.
Keep in mind that the commute from home to work is never deductible (unless you have a qualified home office). But, if you are temporarily assigned to another location that is further from your house than your regular office, you can deduct the extra miles driven. If your employer reimburses you for mileage or provides you with a company car, then you cannot deduct this from your taxes.
Confusing? For sure, but keep in mind that we are always here whenever you call so call anytime.
As the Uber and Lyft community are continuously growing, tax questions come into play. It’s an easy way to make money and create your own work hours. That’s two great advantages wanted in any job! The downfall is, of course, taxes will come due on all that earned income.
Since a vehicle is a necessity, it is assuring to know that you can deduct some expenses to lessen the tax hit. You have two method options, Actual Expense Method or Standard Mileage Method.
Under the Actual Expense Method, you can deduct actual expenses like gas charges, wireless phone plans/accessories, repairs/maintenance and insurance. These are all of course limited on the percentage of business use vs. personal use. This method requires strict record keeping.
Under the Standard Mileage Method, you deduct $.535 (for 2017) per mile used for business use. This is favored sometimes because you don’t have to have in depth record keeping. Just keep track of miles used while working.
Depending on how much time is spent “Ubering” or “Lyfting” will determine which method is more advantageous. We all want the bigger tax deduction!
Nobody likes owing the IRS a large debt. Don’t stress yourself too bad, you have some options to help ease the burden of that large tax bill. There are two specific options I will outline for you. These include the OIC Program and Installment Agreements.
The Offer in Compromise (OIC) program allows a settlement of the tax liability for less than the full amount owed. The amount offered has to be equal to or greater than the value that is realized from the taxpayer’s assets. There are three ways the IRS will accept the OIC Program:
• There is doubt that the amount owed is fully collectible. The taxpayer’s income and assets are less that the tax liability owed.
• There is doubt in regards to the existence or amount of tax debt under law related to the liability.
• The tax amount owed would create an economic hardship or would be unequitable.
The Installment Agreements allows a taxpayer to make a series of monthly payments overtime if the full amount owed can’t be paid in 120 days. To set up the installments you must file form 9465. You have a few options on how to make the monthly payments. Some of these include:
• Payroll deductions
• Debit to your bank account each month
• Online/phone payments
So, when you see that large tax bill during tax season don’t be so alarmed. You have plenty of ways to get it paid back without putting your bank account in the negative.
All have taken notice to the for-sale signs everywhere. It seems the real estate market is on a spiral only going up. While the higher homes prices and bidding wars are not ideal for the buyer’s market, it has great advantages for the sellers.
Are you or do you know of anyone frightened by the large amount of profit turned on the sale of a home? Well you’re in luck! Talking tax, there is a fantastic residential gain exclusion for singles and married couples. It is quite generous at a $250,000 excluded gain for singles and $500,000 excluded for married couples.
There are a few conditions that must be met that include an ownership, use and frequency test. The ownership and use tests require that the individual(s) own and use the home as a principal residence for at least two out of five years prior to the sale. The frequency test is a limitation that allows the annual exclusion to be used only once every two years.
For example, Jimmy bought a home in 2005 for $200,000 and then married Julie in 2008, whom moved in with Jimmy. In 2016, they sold their home for $700,000. They can exclude the entire $500,000 gain on a joint return because all tests are met.
How can you benefit yourself now and in the future at the same time? It’s simple, save money in a tax-deferred retirement account like a traditional IRA. A traditional IRA is a personal savings plan that allows a taxpayer to accumulate money tax free. For 2017, you can qualify for up to $5,500 in tax-deferred contributions made. If you’re 50 or older it is an extra $1,000.
To provide a clear picture, let’s say you contribute $5,500 to a traditional IRA. If you’re in the 25% tax bracket, this allows $1,375 in tax savings! Not only do you receive a tax savings, you also accumulate for retirement days.
Along with a tax deduction for traditional IRA contributions, there is a “Saver’s Credit” available to lower income individuals. You can receive a maximum credit of up to $2,000. Credits are much more beneficial than a deduction for the fact they reduce your tax liability dollar for dollar. Why not get both?
Credits are deducted straight from your tax liability usually preferred over a deduction. Did you know If you have qualifying education expenses you are allowed up to a $2,500 tax credit per student, of which up to $1,000 is refundable on the American Opportunity Tax Credit! The credit equals 100% of the first $2,000 of qualified expenses plus 25% of up to $2,000 in excess, equaling a possible $2,500. What’s a qualified expense? Included are tuition and fees required for enrollment, course materials and textbooks. The limitations on this credit are; you cannot include room and board or activity fees, must be expenses related to the first four years of post-secondary education and only used four times per student.
What tax incentives are there for going to graduate school? The Lifetime Learning credit is a credit worth up to $2,000 per student (20% of $10,000 of expenses per year). This credit can be used for an unlimited number of years and for post-secondary educational expenses.