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Summer Day Camp Expenses May Qualify for a Tax Credit 

5/19/2016

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Along with the lazy, hazy days of summer come some extra expenses, including summer day camp. However, this office has some good news for parents: those added expenses may help you qualify for a tax credit.

Many parents who work or are looking for work must arrange for care of their children under 13 years of age during the school vacation.

Here are five facts the IRS wants you to know about a tax credit available for child care expenses. The Child and Dependent Care Credit is available for expenses incurred during the summer and throughout the rest of the year.
1. The cost of day camp may count as an expense towards the child and dependent care credit.
2. Expenses for overnight camps do not qualify.
3. Whether your childcare provider is a sitter at your home or a daycare facility outside the home, you'll get some tax benefit if you qualify for the credit.
4. The credit can be up to 35 percent of your qualifying expenses, depending on your income.
5. You may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.  
 

Stanek Tax Services · 15701 Hwy 50 Suite 204 · Clermont, FL 34711
Tel: (407) 434-1040 · Fax: (877) 386-1040

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Spring Cleaning Your Tax Records

4/27/2016

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What should you keep? What can you toss? How should your store information? These and other questions about recordkeeping perennially arise around tax time. Here are some guidelines to help you keep only what you need.

Why keep records? 
You should retain certain information—receipts, diaries, acknowledgments from charities, canceled checks—in case the IRS audits your return. Having this information will help you prove entitlement to deductions, credits, and other tax positions taken on your return. Without this information, you may lose out on deductions to which you are otherwise entitled.

How long to keep records? 
Because the IRS generally has 3 years from the due date of your return (or the filing date if later) to audit you, it’s a good idea to keep all records related to the return for at least 3 years. However, the IRS has 6 years to act if you omit more than 25% of your gross income. And there’s an unlimited period for IRS audits if you don’t file any return. Once the audit period is over, you may still want to keep a copy of the return along with proof of filing (e.g., IRS acknowledgment for an e-filed return) forever. You no longer need supporting documentation, but you’ll want the return to prove you filed it just in case the IRS questions this fact. You’ll also want to keep records related to asset purchases and improvements for the period you own the asset, plus the audit period. Thus, keep records of improvements to your home for as long as you own the home, plus the audit period following the year of sale. When it comes to records related to the basis of securities, you may no longer need to keep records. Starting in 2011, brokerage firms had to track the basis of stock purchases. Starting in 2012, this obligation extends to mutual funds. Thus, going forward, if you acquired securities in 2011 or later, you may not need to keep confirmation statements or other records showing basis; the brokerage firm or mutual fund will do it for you.

How to keep records?
You can, of course, keep paper receipts and other paper documents for tax purposes. However, you might want to use technology to simplify recordkeeping. For example, consider an app to scan tax receipts and then store them with tax records on your computer. Electronic recordkeeping is acceptable as long as you don’t tamper with them.

Stanek Tax Services · 15701 Hwy 50 Suite 204 · Clermont, FL 34711 Tel: (407) 434-1040 · Fax: (877) 386-1040

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IRS DELAYS FILING DEADLINE FOR FORMS 1095-B AND 1095-C

1/20/2016

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The IRS has announced a delay in the filing due dates for Forms 1095-B and 1095-C.

The new date for furnishing the 2015 Form 1095-B, Health Coverage, and the 2015 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, to individuals is now March 31, 2016, extended from the original date of February 1, 2016.
The due date for filing with the IRS is moved from February 29, 2016 to May 31, 2016, if not filing electronically, and from March 31, 2016, to June 30, 2016 if filing electronically.
What does this mean to you and your taxes? It means that if you have not received either your 1095-A,B or C at the time of your tax preparation appointment, you will need to provide proof of the Health insurance that you paid. That does not matter whether you purchased your insurance trough your employer or on your own, we will still need to verify and document your coverage. Sorry for the inconvenience, blame you Congressional Representative for the extra paperwork and reporting requirements.

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Don’t Fall for New Tax Scam Tricks by IRS Posers

12/22/2015

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Though the tax season is over, tax scammers work year-round. The IRS advises you to stay alert to protect yourself against new ways criminals pose as the IRS to trick you out of your money or personal information. These scams first tried to sting older Americans, newly arrived immigrants and those who speak English as a second language. The crooks have expanded their net, and now try to swindle virtually anyone. Here are several tips from the IRS to help you avoid being a victim of these scams:

  • Scams use scare tactics.  These aggressive and sophisticated scams try to scare people into making a false tax payment that ends up with the criminal. Many phone scams use threats to try to intimidate you so you will pay them your money. They often threaten arrest or deportation, or that they will revoke your license if you don’t pay. They may also leave “urgent” callback requests, sometimes through “robo-calls,” via phone or email. The emails will often contain a fake IRS document with a phone number or an email address for you to reply.

  • Scams use caller ID spoofing.  Scammers often alter caller ID to make it look like the IRS or another agency is calling. The callers use IRS titles and fake badge numbers to appear legit. They may use online resources to get your name, address and other details about your life to make the call sound official.

  • Scams use phishing email and regular mail.  Scammers copy official IRS letterhead to use in email or regular mail they send to victims. In another new variation, schemers provide an actual IRS address where they tell the victim to mail a receipt for the payment they make. All in an attempt to make the scheme look official.

  • Scams cost victims over $20 million.  The Treasury Inspector General for Tax Administration, or TIGTA, has received reports of about 600,000 contacts since October 2013. TIGTA is also aware of nearly 4,000 victims who have collectively reported over $20 million in financial losses as a result of tax scams.
The real IRS will not:
  • Call you to demand immediate payment. The IRS will not call you if you owe taxes without first sending you a bill in the mail.
  • Demand that you pay taxes and not allow you to question or appeal the amount that you owe.
  • Require that you pay your taxes a certain way. For instance, require that you pay with a prepaid debit card.
  • Ask for credit or debit card numbers over the phone.
  • Threaten to bring in police or other agencies to arrest you for not paying.
If you don’t owe taxes or have no reason to think that you do:
  • Do not provide any information to the caller. Hang up immediately.
  • Contact the Treasury Inspector General for Tax Administration. Use TIGTA’s “IRS Impersonation Scam Reporting” web page to report the incident.
  • You should also report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add "IRS Telephone Scam" in the notes.
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Facts about Mortgage Debt Forgiveness

12/20/2015

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If your lender cancelled or forgave any of your mortgage debt, you generally have to pay tax on that amount. But there are exceptions to this rule for some homeowners who had mortgage debt forgiven in 2014. This provision has not yet been extended for 2015.
1. Cancelled debt normally results in taxable income. However, you may be able to exclude the cancelled debt from your income if the debt was a mortgage on your main home.
2. To qualify, you must have used the debt to buy, build or substantially improve your principal residence. The residence must also secure the mortgage.
3. The maximum qualified debt that you can exclude under this exception is $2 million. The limit is $1 million for a married person who files a separate tax return.
4. You may be able to exclude from income the amount of mortgage debt reduced through mortgage restructuring. You may also be able to exclude mortgage debt cancelled in a foreclosure.
5. You may also qualify for the exclusion on a refinanced mortgage. This applies only if you used proceeds from the refinancing to buy, build or substantially improve your main home. The exclusion is limited to the amount of the old mortgage principal just before the refinancing.
6. Proceeds of refinanced mortgage debt used for other purposes do not qualify for the exclusion. For example, debt used to pay off credit card debt does not qualify. 
7. If you qualify, report the excluded debt on Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness.
8. Other types of cancelled debt do not qualify for this special exclusion. This includes debt cancelled on second homes, rental and business property, credit cards or car loans. In some cases, other tax relief provisions may apply, such as debts discharged in certain bankruptcy proceedings.
9. If your lender reduced or cancelled at least $600 of your mortgage debt, they normally send you a statement in January of the next year. Form 1099-C, Cancellation of Debt, shows the amount of cancelled debt and the fair market value of any foreclosed property.
10. Check your Form 1099-C for the cancelled debt amount shown in Box 2, and the value of your home shown in Box 7. Notify the lender immediately of any incorrect information so they can correct the form.



Stanek Tax Services · 15701 Hwy 50 Suite 204 · Clermont, FL 34711
Tel: (407) 434-1040 · Fax: (877) 386-1040


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Seven Important Tax Facts about Medical and Dental Expenses

12/5/2015

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If you paid for medical or dental expenses in 2014, you may be able to get a tax deduction for costs not covered by insurance. The IRS wants you to know these facts about claiming the medical and dental expense deduction.
1. You must itemize.  You can only claim medical and dental expenses for costs not covered by insurance if you itemize deductions on your tax return. You cannot claim medical and dental expenses if you take the standard deduction.
2. Deduction is limited.  For individuals who are 65 years or older (and only for 2013 – 2016), you can deduct medical and dental expenses that are more than 7.5% of your adjusted gross income. If you’re under age 65, the total of your medical expenses must exceed 10% of your adjusted gross income to yield a tax deduction.
3. Expenses paid in 2014.  You can include medical and dental costs that you paid in 2014, even if you received the services in a previous year. Keep good records to prove the amount you paid and in what year you paid the expenses.
4. Qualifying expenses.  You may include most medical or dental costs that you paid for yourself, your spouse and your dependents. Some exceptions and special rules apply.
5. Costs to include.  You can normally claim the costs of diagnosing, treating, easing or preventing disease. The costs of prescription drugs and insulin qualify. The costs of medical, dental and some long-term care insurance also qualify.
6. Travel is included.  You may be able to claim the cost of travel to obtain medical care. That includes the cost of public transportation or an ambulance as well as tolls and parking fees. If you use your car for medical travel, you can deduct the actual costs, including gas and oil or, instead of deducting the actual costs, you may deduct the standard mileage rate for medical travel and that is 23.5 cents per mile for 2014. Good records of travel expenses are advised.
7. No double benefit.  Funds from Health Savings Accounts or Flexible Spending Arrangements used to pay for medical or dental costs are usually tax-free. Therefore, you cannot deduct expenses paid with funds from those plans.



Stanek Tax Services · 15701 Hwy 50 Suite 204 · Clermont, FL 34711
Tel: (407) 434-1040 · Fax: (877) 386-1040


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Health Insurance Tax Breaks for the Self-Employed

11/10/2015

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Here is some information about a special tax deduction for the self-employed. You may be able to deduct premiums paid for medical and dental insurance and qualified long-term care insurance for you, your spouse, and your dependents if you are one of the following:
· A self-employed individual with a net profit reported on Schedule C or C-EZ or Schedule F for farming.
· A partner with net earnings from self-employment reported on Schedule K-1.
· A shareholder owning more than 2% of the outstanding stock of an S corporation with wages from the corporation reported on Form W-2, Wage and Tax Statement.
The insurance plan must be established under your business.
· For self-employed individuals filing a Schedule C, C-EZ, or F, the policy can be either in the name of the business or in the name of the individual.
· For partners, the policy can be either in the name of the partnership or in the name of the partner. You can either pay the premiums yourself or your partnership can pay them and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed payments to be included in your gross income. However, if the policy is in your name and you pay the premiums yourself, the partnership must reimburse you and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed payments to be included in your gross income. Otherwise, the insurance plan will not be considered to be established under your business.
For more-than-2% shareholders, the policy can be either in the name of the S corporation or in the name of the shareholder. You can either pay the premiums yourself or your S corporation can pay them and report the premium amounts on Form W-2 as wages to be included in your gross income. However, if the policy is in your name and you pay the premiums yourself, the S corporation must reimburse you and report the premium amounts on Form W-2 as wages to be included in your gross income. Otherwise, the insurance plan will not be considered to be established under your business.
 
 


Stanek Tax Services · 15701 Hwy 50 Suite 204 · Clermont, FL 34711

Tel: (407) 434-1040 · Fax: (877) 386-1040


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Five Important Tips on Gambling Income and Losses

10/21/2015

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Whether you roll the dice, bet on the ponies, play cards or enjoy slot machines, you should know that as a casual gambler, your gambling winnings are fully taxable and must be reported on your income tax return. You can also deduct your gambling losses…but only up to the extent of your winnings.
Here are five important tips about gambling and taxes:
1.  Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse races, and casinos. It includes cash winnings and the fair market value of prizes such as cars and trips.
2.  If you receive a certain amount of gambling winnings or if you have any winnings that are subject to federal tax withholding, the payer is required to issue you a Form W-2G, Certain Gambling Winnings. The payer must give you a W-2G if you receive:
· $1,200 or more in gambling winnings from bingo or slot machines;
· $1,500 or more in proceeds (the amount of winnings minus the amount of the wager) from keno;
· More than $5,000 in winnings (reduced by the wager or buy-in) from a poker tournament;
· $600 or more in gambling winnings (except winnings from bingo, keno, slot machines, and poker tournaments) and the payout is at least 300 times the amount of the wager; or
· Any other gambling winnings subject to federal income tax withholding.
3.  Generally, you report all gambling winnings on the "Other income" line of Form 1040, U.S. Federal Income Tax Return.
4.  You can claim your gambling losses up to the amount of your winnings on Schedule A, Itemized Deductions, under ‘Other Miscellaneous Deductions.' You must report the full amount of your winnings as income and claim your allowable losses separately. You cannot reduce your gambling winnings by your gambling losses and report the difference. Your records should also show your winnings separately from your losses.
5.  Keep accurate records. If you are going to deduct gambling losses, you must have receipts, tickets, statements and documentation such as a diary or similar record of your losses and winnings.



Stanek Tax Services · 15701 Hwy 50 Suite 204 · Clermont, FL 34711
Tel: (407) 434-1040 · Fax: (877) 386-1040


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President Signs Bill Accelerating Deductions for Donations to Family of Slain NYPD

4/2/2015

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On April 1, President Obama signed into law the Slain Officer Family Support Act of 2015 (HR 1527), which accelerates the income tax benefits for charitable cash contributions to the families of New York Police Department Detectives Wenjian Liu and Rafael Ramos. Contributions made to the families of the slain officers between January 1, 2015, and April 15,2015, will be treated as if the contribution was made on December 31, 2014
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Facts about your taxes & the Affordable Care Act

12/31/2014

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The Patient Protection and Affordable Care Act includes health insurance and tax law changes. Several measures of the Affordable Care Act, also known as Obamacare, have been implemented, but the most significant changes take effect in 2014 and 2015, including:

Individual mandate:

Requires most Americans to have qualified health insurance as of Jan. 1, 2014. Coverage can be obtained through employer-sponsored plans, government programs such as Medicare or Medicaid, private plans or through the new federal or state marketplaces, also called health insurance exchanges.

Premium tax credits and financial assistance:

Available to qualifying individuals who don't have access to employer-provided coverage and purchase health insurance through a marketplace. Eligibility and amounts are based on the cost of marketplace premiums and your household size and income. The credit will be paid directly to the health insurance company to help cover monthly payments. If you elect to receive a lesser credit or no credit at all, you can claim the refundable credit on your 2014 tax return (due April 15, 2015).

Tax penalty for uninsured:

If you don't have health insurance for a total of 3 or more months in 2014, you may be subject to a penalty payable on your tax return due April 15, 2015. The amount is based on the number of uninsured individuals in your household and household income.

Small business mandate:

Starting in 2015, businesses with more than 50 FTE employees in 2014 (or a combination of full-time and part-time employees equivalent to 50 FTE employees) must either offer a minimum level of health care coverage to employees and their dependents, or pay the IRS Employer Shared Responsibility payments for any FTEs who purchase coverage through a marketplace and receive the premium tax credit.

 
Changes impacting your 2014 tax return:
Stanek Tax Services  will navigate all the ACA changes plus hundreds of deductions and credits for you but here's a summary of how the ACA impacts federal tax returns due April 15, 2015:

 As of January 1, 2014, most Americans are required to have minimum essential health insurance. For most taxpayers, this means little or no changes to your taxes.

 If you had employer-provided insurance for most of 2014, or you purchased coverage through a private exchange or directly from an insurance company, the ACA's insurance mandate won't impact your taxes. (Note: You may receive IRS Form 1095-B and/or 1095-C from your employer or insurance company in Jan. 2015, but you don't need to report that info on this year's tax return.)

If you purchased insurance for 2014 from a marketplace, you'll receive IRS Form 1095-A in Jan. 2015.

If you received the advanced premium credit in 2014, that information will be on your Form 1095-A. You may receive a bigger tax credit or have to pay back some or all of the credit if your actual income is more or less than the amount you estimated at the time you purchased coverage from your marketplace.
 If you did not have insurance for 3 or more months in 2014, you may be subject to a penalty (also known as an individual shared responsibility payment) that you must pay when filing your taxes. The penalty is 1% of your 2014 income or $95 per adult – whichever is higher – and $47.50 per uninsured dependent under the age of 18, up to $285 total per family.

 IMPORTANT! If you were uninsured and plan to claim an exemption in order to avoid the penalty, go to www.healthcare.gov/exemptions to see if you need to file an exemption application. Be sure to mail your exemption application as soon as possible because processing can take several weeks. If your application is accepted, you'll be issued an exemption certificate number (ECN). Since you must report your ECN on your tax return, don't wait to apply - doing so could delay processing of your tax return and your tax refund!

 

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