Category Archives: Students and Parents

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 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 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

Source: IRS Tax Tips

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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.

Back-to-School Tax Credits

Seal of US Treasury IRSTake Advantage of Credits and Deductions 

Are you, your spouse or a dependent off to college? If so, here’s a quick tip from the IRS: some of the costs you pay for higher education can save you money at tax time. Here are several important facts you should know about education tax credits:

  • American Opportunity Tax Credit.  The AOTC can be up to $2,500 annually for an eligible student. This credit applies for the first four years of higher education. Forty percent of the AOTC is refundable. That means that you may be able to get up to $1,000 of the credit as a refund, even if you don’t owe any taxes.
  • Lifetime Learning Credit.  With the LLC, you may be able to claim a tax credit of up to $2,000 on your federal tax return. There is no limit on the number of years you can claim this credit for an eligible student.
  • One credit per student.  You can claim only one type of education credit per student on your federal tax return each year. If more than one student qualifies for a credit in the same year, you can claim a different credit for each student.  For example, you can claim the AOTC for one student and claim the LLC for the other student.
  • Qualified expenses.  You may include qualified expenses to figure your credit.  This may include amounts you pay for tuition, fees and other related expenses for an eligible student. Refer to for more about the additional rules that apply to each credit.
  • Eligible educational institutions.  Eligible schools are those that offer education beyond high school. This includes most colleges and universities. Vocational schools or other postsecondary schools may also qualify.
  • Form 1098-T.  In most cases, you should receive Form 1098-T, Tuition Statement, from your school. This form reports your qualified expenses to the IRS and to you. You may notice that the amount shown on the form is different than the amount you actually paid. That’s because some of your related costs may not appear on Form 1098-T. For example, the cost of your textbooks may not appear on the form, but you still may be able to claim your textbook costs as part of the credit. Remember, you can only claim an education credit for the qualified expenses that you paid in that same tax year.
  • Nonresident alien.  If you are in the U.S. on an F-1 student visa, you usually file your federal tax return as a nonresident alien. You can’t claim an education credit if you were a nonresident alien for any part of the tax year unless you elect to be treated as a resident alien for federal tax purposes. To learn more about these rules see Publication 519, U.S. Tax Guide for Aliens.
  • Income limits. These credits are subject to income limitations and may be reduced or eliminated, based on your income.

 NEED HELP?  CALL (619) 589-8680 TODAY!

Family member in College? Need Tax Breaks?

There are three different tax breaks that might help you.

  • Tuition and Fees.  Required document is 1098-T.  In addition to the tuition and fees, I will need the name, address and Tax ID number of the school.  Unfortunately, the student is the one who gets the 1098-T – not the parent!  If they lost it – they will need to go to
  • Other expenses.  If your student doesn’t already have a degree you can deduct books, supplies, special software, maybe even their computer.  Be sure to get all related costs from your student. 
  • College Saving Plans.  Did you use a Section 529 Plan or a “Coverdell Savings Accounts” to help pay for the costs?  If so, you will be receiving IRS Form 1099-Q.  Your money grew – tax free.  We will need to show that the funds were used for “qualified expenses” otherwise you will be taxed now.  You also might subject to a penalty – so your tax preparer will need records of any and all costs.
  • Youngster’s Tax Returns.  If the student is your child, I can run what is called a “Kiddie Tax”.  Make sure your child does not file their own return until we’ve gone over the rules. 


Source: Tax News & Tips, Year End 2013

Second Half 2013 Tax Questions Just To Be Safe

Pat_003_S_Mid Year Tax Questions You Need To Ask  Yourself

This is a good time to take a look at your present financial picture.  Has your income or withholding changed in a significant way? If you are my client – then I need to know.

  Most new tax rules affect incomes above $200K.  Will these new rules affect you?  If you aren’t sure how these new rules will affect your taxes, give me a call.

 Are you sure you are withholding enough to cover your taxes?  Let’s go over your information, and make sure it is where it needs to be.  If it isn’t enough, and you need to make estimated tax payments, I can help you.

√  Significant changes in your income?  If so, it can have a big impact on your taxes.  Don’t get fooled by the “graduated tax rate”.  10% income increase can result in a 20% increase in your taxes.  Don’t wait on this, call me ASAP so we can be sure you are covered.

√  Life-Changing Events?    Divorce, Marriage? New Child?  All these shape how the government looks at you.  If there are job changes, home sale, moves, launching a new business, loss of a job or starting a new one, these are all important events that impact your financial profile.  Let me know about any of these.

√  Unscheduled Income?  Unemployment benefits, social security or pension, sale of an investment property or rental …. all of these can affect your tax rate also.  Let me know as early as possible so we can factor them in.

When it comes to taxes, I’m in a “need-to-know” capacity.  I need to know about anything that can affect your tax rate so you aren’t caught off-guard.

Have a great Autumn!