Monthly Archives: February 2014

Reducing the Burden of Organizing Your Tax Information in 3 Basic Steps

taxes

Westchester NY accountant Paul Herman has all the answers to your personal finance questions! 

The stress of tax season is upon us, but there are ways that you can make sure everything is all in order when it comes time to file your taxes. Here are some easy tips for keeping tax info organized, so you can stay on top of your taxes all yearlong and nothing gets lost in the craziness of tax season!

1) Have a filing system for use during the year.

Maintaining a filing system yearround will help you at the end of the year because you’ll know where to go and where to look for certain documents. So many things happen during the year that could impact your taxes, so it’s best to have a place to file them away for easy access later.

If you make a charitable donation, you can file the receipt. If you buy a new home, you can file the closing statement and so on. This way, with a filing system, when you get the majority of your documents in January, you’ll have a place to put them and organize them all!

​You can set it up however you want, whether in an accordion file with tabs or in labeled folders in a desk drawer. As long as you know where everything is, that’s what really matters because that’s going to help you during tax season.

2) Ask your accountant or tax preparer questions as they come up during the year.

Issues are going to come up from time to time throughout the year that you may not remember at the end of the year, so it’s important to ask while the issues are fresh.

Whether this is related to buying and selling stocks, realized capital gains or certain transactions, it’s important that you talk to your accountant or tax preparer and ask – will this affect my year-end taxes? If so, what documentation will I need? Ask these questions while they’re in your head – save yourself the stress later.

3) Organize your checkbooks and credit cards using QuickBooks.

It’s important to keep a bookkeeping system such as QuickBooks so that you keep track of checks you write, your income and your credit card charges. If you write checks during the year for charitable contributions, medical bills, prescriptions and more, you can categorize them as such on QuickBooks for later reference. This will also help to see what expenses will count as tax deductions.

You can even connect your credit card company and bank to QuickBooks to easily download transactions as you make them. From there, you’ll be able to categorize these transactions during the year, making it even easier to come back to them when you need them.

All this will make it so simple at the end of the year to run a summary report of your expenses in a matter of minutes to print and give to your accountant!

Remember, organization will help reduce your stress as you get your tax information together for tax season. Take care of your taxes as soon as you can to make it easier on yourself. Need help? Contact me to get started.

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

Herman and Company CPA’s proudly serves Bedford Hills NY, Chappaqua NY, Harrison NY, Scarsdale NY, White Plains NY, Mt. Kisco NY, Pound Ridge NY, Greenwich CT and beyond.

Missing Your Form W-2?

Westchester NY accountant Paul Herman has all the answers to your personal finance questions!

You should receive a Form W-2, Wage and Tax Statement, from each of your employers for use in preparing your federal tax return. Employers must furnish this record of 2013 earnings and withheld taxes no later than January 31, 2014 (if mailed, allow a few days for delivery).

If you do not receive your Form W-2, contact your employer to find out if and when the W-2 was mailed. If it was mailed, it may have been returned to your employer because of an incorrect address. After contacting your employer, allow a reasonable amount of time for your employer to resend or to issue the W-2.

If you still did not receive your W-2 by February 15th, contact the IRS for assistance at 1-800-829-1040. When you call, have the following information handy:

• The employer’s name and complete address, including zip code, the employer’s identification number (if known), and telephone number,
• Your name and address, including zip code, Social Security number, and telephone number; and
• An estimate of the wages you earned, the federal income tax withheld, and the dates you began and ended employment.

If you misplaced your W-2, contact your employer. Your employer can replace the lost form with a “reissued statement.” Be aware that your employer is allowed to charge you a fee for providing you with a new W-2.

You still must file your tax return on time even if you do not receive your Form W-2. If you cannot get a W-2 by the tax-filing deadline, you may use Form 4852, Substitute for Form W-2, Wage and Tax Statement, but it will delay any refund due while the information is verified.

If you receive a corrected W-2 after your return is filed and the information it contains does not match the income or withheld tax that you reported on your return, you must file an amended return on Form 1040X, Amended U.S. Individual Income Tax Return.

Forms 4852 and 1040X and their instructions are available on the IRS Web site, IRS.gov or by calling 1-800-TAX-FORM (1-800-829-3676).

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

Herman and Company CPA’s proudly serves Bedford Hills NY, Chappaqua NY, Harrison NY, Scarsdale NY, White Plains NY, Mt. Kisco NY, Pound Ridge NY, Greenwich CT and beyond.

Make Sure You’re Informed About the Earned Income Tax Credit

Westchester NY accountant Paul Herman has all the answers to your personal finance questions! 

The Earned Income Tax Credit (EITC) is a refundable federal income tax credit for low to moderate income-earning individuals and families. If you qualify, the credit could be a maximum amount of up to $6,044 in 2013. This means you could pay less or no federal tax or even get a refund.

The EITC is based on your earned income and whether or not there are qualifying children in your household. You must file a tax return to claim the EITC and if you have children, they must meet the relationship, age and residency requirements.

What is the EITC?

You may qualify for the EITC if you worked any part of last year and made less than $51,000 in 2013.

Who is eligible for the EITC?

If you were employed for at least part of 2013, you may be eligible for the EITC based on these general requirements:

  • You earned less than $14,340 ($19,680 if married filing jointly) and did not have any qualifying children
  • You earned less than $37,870 ($43,210 if married filing jointly) and have one qualifying child (See Who is a Qualifying Child Below)
  • You earned less than $43,038 ($48,378 if married filing jointly) and have two qualifying children
  • You earned less than $46,227 ($51,567 if married filing jointly) and have three or more qualifying children
Note: The Tax Relief and Job Creation Act signed into law December of 2010 provides a temporary increase in EITC and expands the credit for workers with three or more qualifying children. These changes are temporary and apply to 2009, 2010, 2011, 2012 and 2013 tax years.

In addition you must meet a few basic rules:

  • You must have a valid Social Security number.
  • You must have earned income from employment or from self-employment.
  • Your filing status cannot be married, filing separately.
  • You must be a U.S. citizen or resident alien all year, or a nonresident alien married to a U.S. citizen or resident alien and filing a joint return.
  • You cannot be a qualifying child of another person.
  • If you do not have a qualifying child, you must: be age 25 but under 65 at the end of the year, live in the United States for more than half the year, and not qualify as a dependent of another person.
  • You cannot file Form 2555 or 2555-EZ (related to foreign earn income).
  • Your investment income must be $3,300 or less.

There are Special EITC Rules for:

  • A member of the military,
  • A minister or member of the clergy,
  • Impacted by disasters, or
  • Receiving disability benefits or have a qualifying child with a disability.

Tax Year 2013 Maximum Credit

  • $6,044 with three or more qualifying children
  • $5,372 with two qualifying children
  • $3,250 with one qualifying child
  • $487 with no qualifying children

Does my child qualify for the EITC?

To determine if your child is a qualifying child, review the relationship, age and residency qualifications listed below:

Relationship
To be your qualifying child, a child must be your:

  • Son, daughter, adopted child, stepchild, eligible foster child, or a descendant of any of them, or
  • Brother, sister, half-brother, half-sister, stepbrother, stepsister, or a descendant of any of them (for example, your niece or nephew).

Definitions to clarify the relationship test

  • Adopted child: An adopted child is always treated as your own child. The term “adopted child” includes a child who was lawfully placed with you for legal adoption.
  • Eligible Foster Child: A person is your eligible foster child if the child is placed with you by an authorized placement agency or by judgment, decree or other court order.

Age
Your child must be:

  • Under age 19 at the end of 2013,  or
  • A full-time student under age 24 at the end of 2013, or
  • At the end of the filing year, you child was permanently and totally disabled, regardless of age.
  • To be a qualifying child for tax year 2013, the child must be younger than you.

Joint Return
Your child must not file a joint return for 2013 or is filing a joint return for 2013 only as a claim for refund.

Residency
Your child must have lived with you in the United States for more than half of 2013.

Note: There are certain restrictions if more than one person qualifies for the EITC using the same child or if your qualifying child is married. Publication 596, Earned Income Tax Credit, explains these special circumstances. 

Additional Tax Credits

  • Child and Dependent Care Credit – If you paid someone to care for a child or a dependent so you could work, you may be able to reduce your federal income tax. See Publication 503,Child and Dependent Care Expenses.
  • Child Tax Credit – You may qualify for this credit if your child meets the criteria outlined in Publication 972Child Tax Credit.

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

Herman and Company CPA’s proudly serves Bedford Hills NY, Chappaqua NY, Harrison NY, Scarsdale NY, White Plains NY, Mt. Kisco NY, Pound Ridge NY, Greenwich CT and beyond.

Any U.S. tax advice contained in the body of this website is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.