Category Archives: Parents and child care

IRS to Parents: Don’t Miss Out on These Tax Savers

Green CheckmarkIf you’re a parent, here are several tax benefits you should look for when you file your federal tax return:

  • Dependents. In most cases, you can claim your child as a dependent. You can deduct $3,950 for each dependent you are entitled to claim. You must reduce this amount if your income is above certain limits. For more on these rules, see Publication 501, Exemptions, Standard Deduction and Filing Information.
  • Child Tax Credit. You may be able to claim the Child Tax Credit for each of your qualifying children under the age of 17. The maximum credit is $1,000 per child. If you get less than the full amount of the credit, you may be eligible for the Additional Child Tax Credit. For more, see Schedule 8812 and Publication 972, both titled Child Tax Credit.
  • Child and Dependent Care Credit.  You may be able to claim this credit if you paid for the care of one or more qualifying persons. Dependent children under age 13 are among those who qualify. You must have paid for care so that you could work or could look for work. See Publication 503, Child and Dependent Care Expenses, for more on this credit.
  • Earned Income Tax Credit.  You may qualify for EITC if you worked but earned less than $52,427 last year. You can get up to $6,143 in EITC. You may qualify with or without children. Use the 2014 EITC Assistant tool at IRS.gov to find out if you qualify. See Publication 596, Earned Income Tax Credit, to learn more.
  • Adoption Credit.  You may be able to claim a tax credit for certain costs you paid to adopt a child. For details see Form 8839, Qualified Adoption Expenses.
  • Education tax credits.  An education credit can help you with the cost of higher education.  There are two credits that are available. The American Opportunity Tax Credit and the Lifetime Learning Credit may reduce the amount of tax you owe. If the credit reduces your tax to less than zero, you may get a refund. Even if you don’t owe any taxes, you still may qualify. You must complete Form 8863, Education Credits, and file a return to claim these credits. Use the Interactive Tax Assistant tool on IRS.gov to see if you can claim them. Visit the IRS’s Education Credits Web page to learn more. Also see Publication 970, Tax Benefits for Education, for more on this topic.
  • Student loan interest.  You may be able to deduct interest you paid on a qualified student loan. You can claim this benefit even if you do not itemize your deductions. For more information, see Publication 970.
  • Self-employed health insurance deduction. If you were self-employed and paid for health insurance, you may be able to deduct premiums you paid during the year. This may include the cost to cover your children under age 27, even if they are not your dependent. See Publication 535, Business Expenses, for details.

You can get related forms and publications on IRS.gov.

Source: IRS Tax Tips

IRS YouTube Videos:

IRS Podcasts:

Reminders For This Tax Season

Fried-ClockHave you set up your appointment to have taxes done?

The following are large items that are already set in law that you can count on (literally and figuratively) for this tax season. Don’t forget about income limitations and phase outs.

Child Credits.

For each qualifying child under age 17 knocks up to $1,000 from your tax bill.

College Education.

Two big credits are available.  The American Opportunity Credit can reduce your tax bill by up to $2,500 per eligible student or up to $2,000 through the Lifetime Learning Credit.

0% Capital Gains Rate.

This capital gains rate is available to all taxpayers in the 10% and 15% tax brackets.  Married taxpayers qualify for the 0% rate if their taxable income is $73,800 or less, for single taxpayers $36,900 or less, and head of household is $49,400.  To see the 2015 Tax Brackets.

Tax Free Gains on Home Sales.

Married couples can exclude up to $500,000 from their gain from their income from the sale of their home, for single taxpayers the maximum exclusion is $250,000.  Ownership and occupancy rules apply.

Energy Saving Credits.

You can claim a credit for up to 30% of the cost of buying and installing solar panels, solar water heaters, geothermal heat pumps and small wind energy systems.

First Time Home Buyers Can Use Their IRA – penalty-free!

iStock_000011965294LargeAnyone that qualifies  as a “First Time Home Buyer” can take up to $10,000 out of their IRA penalty free for certain purchase costs.  BUT did you know it doesn’t have to be for your home purchase?  Call for more information at  (619) 589-8680 or use our contact form.

IRS Back-to-School Reminder for Parents and Students

Check Out College Tax Credits for 2014 and Years Ahead

WASHINGTON ― With another school year now in full swing, the Internal Revenue Service reminded parents and students that now is a good time to see if they will qualify for either of two college tax credits or any of several other education-related tax benefits when they file their 2014 federal income tax returns. Continue reading

SPECIAL RULE FOR CHILDREN OF DIVORCED OR SEPARATED PARENTS!

Divorce jpegCHILD AND DEPENDENT CARE EXPENSES.

IRS Form 2441 is all about child and dependent care.  It has a section that talks about the *special rules* that are applied to children of divorced or separated parents.

To be a *qualifying person*, the person had to live with you for more than half of 2013.

 

First, what does *Qualifying Person* mean?  According to the IRS, a qualifying person is: Continue reading

Communicating Your Child Care Business Policies

Child Care Tax Specialists

SHOULD YOU CREATE A  POLICY HANDBOOK FOR YOUR CHILD CARE BUSINESS?  ABSOLUTELY!

It is your responsibility to communicate your policies in your business.  Clients will appreciate the information, and creates a basis of communication between you and the client.  It establishes how you conduct your business, and gives parents an “inside look” of what to expect in your performance.  It also lets them know what is expected of them.  To learn more about what to include in your handbook,  see Communicating Your Child Care Business Policies

 

 

 

 

 

 

 

When Should Child Care Professionals Raise Their Rates?

January 29 Header for ChildCare Site

Does talking about rate increases with your client make you uncomfortable?

Child Care Tax SpecialistsYou’re not alone.  Many child care providers feel awkward talking about rates and fee increases with their clients.  However, just as many of your clients get annual reviews and increases in their job-related compensation, it isn’t unreasonable for you to need to adjust your rates if only to meet inflation.

Read HOW and WHEN TO RAISE YOUR RATES

 

Helping Your Widowed Parent With Legal and Financial Issues

A checklist for helping a surviving parent get organized.

  1. Find assets.
    Often, just one spouse manages most of a couple’s finances. Be sure that your surviving parent knows where important assets are located. Over time, you may find it helpful to make a master list of bank and brokerage accounts, retirement plans, insurance policies, real estate, items in safe deposit boxes, and other significant assets. Make note of sizeable debts as well.
  2. Collect insurance.
    Find out whether your surviving parent is the beneficiary of a life insurance policy and, if so, contact the insurance company and file a claim for benefits. This is one of the first things you can do to ensure there’s enough cash on hand.
  3. Apply for benefits.
    Helping your parent apply for Social Security benefits should be near the top of your list of things to do. Contact the Social Security Administration (www.ssa.gov) for information about survivor’s benefits. In addition, investigate other benefits to which your parent may be entitled, including pension, veterans, or other employment-related payouts.
  4. Change title to jointly owned assets.
    If your parents owned property together — as joint tenants or in another form of joint ownership — the survivor should change the title document to show that he or she now owns the property alone. This will make it easier for your surviving parent to manage the property — and for you to wrap up your surviving parent’s affairs when the time comes. Check title documents for real estate, vehicles, bank or brokerage accounts, and other significant assets to see whether you need to update ownership records.
  5. Update will and trusts.
    Losing a mate will more than likely cause your parent to reevaluate his or her own plans for leaving property at death. If your surviving parent has a will or living trust, you should eventually have him or her review it and change it, if necessary, to reflect your parent’s current life circumstances and wishes. Also take a look at who is named as beneficiary of retirement plans and any other major assets that will pass outside the will or trust.
  6. Take steps to avoid probate court.
    When changing title documents and reviewing your surviving parent’s estate plan, you should consider whether any part of the estate will be subject to probate when he or she dies. Simple probate avoidance methods could save a bundle of time and money — for example, your parent might name pay-on-death beneficiaries for a bank or brokerage accounts that used to be jointly owned.
  7. Update insurance policies.
    If your deceased parent is still named as a beneficiary on insurance policies, those policies will need to be modified, cashed out, or canceled, depending on your parent’s current needs and wishes.
  8. Make a health care directive (living will).
    If your parent hasn’t already prepared a living will and a durable power of attorney for health care, now is the time. These important documents will allow your parent to set out health care wishes and name a trusted person — perhaps you — to oversee his or her care and make medical decisions if that ever becomes necessary. Making health care documents can also open the door to discussing your parent’s feelings about organ donation, burial or cremation, and other final arrangements.For more information, seeHelping a Loved One Make a Power of Attorney.
  9. Make a financial power of attorney.
    This document lets your parent name someone to handle financial matters — from writing monthly checks to managing investments — if he or she ever becomes incapacitated and unable to take care of things alone. Without this document in hand, you or other loved ones would most likely have to go to court to get the necessary authority. For more information, see Helping an Elder Make a Power of Attorney.
  10. Organize documents.
    A world of careful planning won’t do any good if you can’t find important paperwork when you need it. Do what you can to help your mom or dad set up a good filing system. Here are some critical things to keep track of:
    – will, trust, and other estate planning documents
    – powers of attorney
    – bank and brokerage account statements
    – retirement plan statements
    – government benefit paperwork
    – insurance policies
    – business records
    – tax returns
    – credit card and debt information
    – secured places, such as a safe or safe deposit box
    – email accounts and passwords
    – property records for real estate, cars, and other major assets.

Source: NOLO 

Pat Michael and his team at US-TaxLaws is your best source for professional tax preparation services with more than 30 years experience and thousands of satisfied clients.

Personal Tax Preparation   Business Tax Preparation   Partnership Tax Preparation
Corporate Tax Preparation  Incorporation-Choice of Entity   Business Support Services
Corporate Compliance   Audit Representation  Retirement Tax Planning   Wills & Trusts
Estate Planning   Bookkeeping   Payroll 

Safe Harbor Rule Does Not Favor Child Care Providers

January 29 Header for ChildCare Site

Recently, the IRS updated this ruling, and we feel even stronger now that for the vast majority of our child care provider clients this rule is not in their favor and we will not be using it.   To read more, see original post  Safe Harbor Rule Does Not Favor Child Care Providers.

 

Mileage Deductions

January 29 Header for ChildCare Site

 For 2013 you get 56.5¢ for each business mile (keep your logs daily) . While employees can’t deduct driving to work, look at visits to clients, extra meetings, errands or shopping for supplies. Business owners – especially child care providers – have the same and more.  To learn more, click here.

May I Refuse to Care for a Child Who is Not Immunized?

A parent who wants to enroll in your family child care program tells you she refuses to immunize her child. What do you do?

Child Care Tax Specialists takes a look at the issues surrounding refusing a child into a Child Care program.  It is complicated, and there are a lot of exemptions.  Child Care Professionals have to know how to handle this kind of situation.

Read the full post at http://childcaretaxspecialists.com/may-i-refuse-to-care-for-a-child-who-is-not-immunized/

Family Child Care Guide to Visits, Inspections and Interviews

Family Child Care Guide to Visits, Inspections and InterviewsRedleaf Press has a new “how to” guide by Donna C. Hurley and Sharon Woodward.

“Case studies featuring more than twenty common challenges that can occur during visits and skill-based solutions and successful strategies you can use to prepare for those situations
Checklists and self-examination activities to help you welcome and connect with potential families, specialists, and inspectors in positive ways
Support, guidance, and techniques to enhance your program”
Softbound, 144 pgs.

 

Read the full post at http://childcaretaxspecialists.com/guide-to-visits-inspections-and-interviews/

Are You Deducting All of Your Outdoor Expenses?

In Tom Copeland’s “Taking Care of Business”, he touches on what qualifies as outdoor deductions for child care provider businesses.  Bottom line?  Deduct all the expenses that are designated as “ordinary and necessary” to your business, especially if it is used 100% for your business.   But what about those expenses that are used for business and personal purposes?  They may be deductible, in part, so download our Time-Space Percentage Crib Sheet so you can keep track of those receipts!  Download Crib Sheet here.

Keep the Child Care Credit in Mind for Summer

IRS Special Edition Tax Tip 2013-11, May 22, 2013

If you are a working parent or plan to look for work this summer, you may need to pay for the care of your child or children. These expenses may qualify for a tax credit that can reduce your federal income taxes. The Child and Dependent Care Tax Credit is available not only while school’s out for summer, but also throughout the year. Here are eight key points the IRS wants you to know about this credit. Continue reading