10 Tax Tips to Consider If You Have Children
January 14, 2010 | 
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Got Kids? They may have an impact on your tax situation. Listed below are the top 10 things the IRS wants you to consider if you have children.
- 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. The Additional Child Tax Credit is a refundable credit and may give you a refund even if you do not owe any tax.
- 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.
- Children with Earned Income If your child has income earned from working they may be required to file a tax return.
- Children with Investment Income Under certain circumstances a child’s investment income may be taxed at the parent’s tax rate.
- Coverdell Education Savings Account This savings account is used to pay qualified educational expenses at an eligible educational institution. Contributions are not deductible, however, qualified distributions generally are tax-free.
- 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.
Submitted by Sam Cohen
Questions:
8 Facts To Determine Your Filing Status
January 8, 2010 | Subscribe to our RSS Feed
It is important that you choose your correct filing status as it determines your standard deduction, the amount of tax you own, and any refund owed to you.
- Your marital status on the last day of the year determines your marital status for the entire year.
- If more than one filing status applies to you, choose the one that gives you the lowest tax obligation.
- Single filing status generally applies to anyone who is unmarried, divorced or legally separated according to state law.
- A married couple may file a joint return together. The couple’s filing status would be Married Filing Jointly.
- If a spouse died during the year and you did not remarry during 2009, you may still file a joint return with that spouse for the year of death, provided the joint return election is not revoked by a personal representative for the deceased spouse.
- A married couple may elect to file their returns separately. Each person’s filing status would generally be Married Filing Separately.
- Head of Household generally applies to taxpayers who are unmarried. You must also have paid more than half the cost of maintaining a home for you and a qualifying person to qualify for this filing status.
- You may be able to choose Qualifying Widow(er) with Dependent Child as your filing status if your spouse died during 2007 or 2008, you have a dependent child and you meet certain other conditions.
Submitted by Sam Cohen
Questions:
Businesses- Closing out 2009 and Planning for 2010
January 6, 2010 | Subscribe to our RSS Feed
A new year provides an excellent opportunity to take a close look at your business and determine whether you need to make changes. To start 2010 on the right foot the following tips may be useful:
- Close out 2009 properly. Final payroll filings for 2009 are due by February 1, 2010.
- Watch for notification of your new unemployment insurance rate for 2010. It could have as much as tripled, so make sure you pass the new rate on to your payroll service provider and take this increase into account when planning your cash flow and expense pojections.
- Be sure you are classifying your employees correcty. The state is cracking down on employers inappropriately paying associates as contractors.
- Consider your entity classification. There may be tax benefits for converting from a C to an S Corporation. Similarly, a sole proprietor should consider the tax and legal benefits of converting to an S Corporation or an LLC. These elections should be made early in the year.
A more detailed version of this article by Tammy Schneider appears in the Jan/Feb 2010 issue of the “Maryland Messanger,” a publication by the Independent Insurance Agents of Maryland. Please visit their website at www.iiamd.org.
Submitted by Tammy Schneider
Questions?
tammy.schneider@glassjacobson.com