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Now is a Good Time to Plan for Next Year’s Taxes

tax planning

Now is a good time to set up a system so you can keep your tax records safe and easy to find.   Continue reading

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Must-Know Home Office Deduction Tips

You may use either the simplified method or the regular method to claim your deduction. Here are six tips that you should know about the home office deduction:

Art - Home Office

1. Regular and Exclusive Use. As a general rule, you must use a part of your home regularly and exclusively for business purposes. The part of your home used for business must also be:

  • Your principal place of business, or
  • A place where you meet clients or customers in the normal course of business, or
  • A separate structure not attached to your home. Examples could include a garage or a studio.

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You can avoid owing more taxes, or getting a smaller tax refund than expected by reporting changes in your life events to the #Marketplace when they happen.

If you have enrolled for health coverage through the Health Insurance Marketplace and receive advance payments of the premium tax credit in 2015, it is important that you report changes in circumstances, such as changes in your income or family size, to your Marketplace.

Advance payments of the premium tax credit (PTC) provide financial assistance to help you pay for the insurance you buy through the Marketplace. Having at least some of your credit paid in advance directly to your insurance company will reduce the out-of-pocket cost of the health insurance premiums you’ll pay each month.

However, it is important to notify the Marketplace about changes in circumstances to allow the Marketplace to adjust your advance payment amount. This adjustment will decrease the likelihood of a significant difference between your advance credit payments and your actual premium tax credit. Changes in circumstances that you should report to the Marketplace include, but are not limited to:

  • An increase or decrease in your income
  • Marriage or divorce
  • The birth or adoption of a child
  • Starting a job with health insurance
  • Gaining or losing your eligibility for other health care coverage
  • Changing your residence

For the full list of changes you should report, visit HealthCare.gov/how-do-i-report-life-changes-to-the-marketplace.

You may be eligible for the Retirement Savings Credit? Learn more here…

Save on Your Taxes and for Retirement with the Saver’s Credit

If you contribute to a retirement plan, like a 401(k) or an IRA, you may be able to claim the Saver’s Credit. This credit can help you save for retirement and reduce the tax you owe. Here are some key facts that you should know about this important tax credit:

•    Formal Name.  The formal name of the Saver’s Credit is the Retirement Savings Contribution Credit. The Saver’s Credit is in addition to other tax savings you get if you set aside money for retirement. For example, you may be able to deduct your contributions to a traditional IRA.

•    Maximum Credit.  The Saver’s Credit is worth up to $2,000 if you are married and file a joint return. The credit is worth up to $1,000 if you are single. The credit you receive is often much less than the maximum. This is due in part because of the deductions and other credits you may claim.

•    Income Limits.  You may be able to claim the credit depending on your filing status and the amount of your yearly income. You may be eligible for the credit on your 2014 tax return if you are:

o    Married filing jointly with income up to $60,000

o    Head of household with income up to $45,000

o    Married filing separately or a single taxpayer with income up to $30,000

•    Other Rules.  Other rules that apply to the credit include:

o    You must be at least 18 years of age.

o    You can’t have been a full-time student in 2014.

o    No other person can claim you as a dependent on their tax return.

•    Contribution Date.  You must have contributed to a 401(k) plan or similar workplace plan by the end of the year to claim this credit. However, you can contribute to an IRA by the due date of your tax return and still have it count for 2014. The due date for most people is April 15, 2015.

Call (803)470-4938 or email (info@cfittstaxsolutions.com) to ask us which form to file with your income tax return.

C Fitts Tax Solutions | 141 S. Shandon St. Ste. E | Columbia, SC 29205 | http://www.cfittstaxsolutions.com.

It is important that you file your tax return on time even if you can’t pay!

File on Time Even if You Can’t Pay

Do you owe more tax than you can afford to pay when you file? If so, don’t fail to take action. Make sure to file on time. That way you won’t have a penalty for filing late. Here is what to do if you can’t pay all your taxes by the due date.

  • File on time and pay as much as you can.  You should file on time to avoid a late filing penalty. Pay as much as you can with your tax return. The more you can pay on time, the less interest and late payment penalty charges you will owe.
  • Pay online with IRS Direct Pay.  IRS Direct Pay is the latest electronic payment option available from the IRS. It allows you to schedule payments online from your checking or savings account with no additional fee and with an immediate payment confirmation. It’s, secure, easy, and much quicker than mailing in a check or money order. To make a payment or to find out about your other options to pay, visit IRS.gov/payments.
  • Pay the rest of your tax as soon as you can.  If it is possible, get a loan or use a credit card to pay the balance. The interest and fees charged by a bank or credit card company may be less than the interest and penalties charged for late payment of tax. For debit or credit card options, visit IRS.gov.
  • Use the Online Payment Agreement tool.  You don’t need to wait for IRS to send you a bill to ask for an installment agreement. The best way is to use the Online Payment Agreement tool on IRS.gov. You can even set up a direct debit installment agreement. When you pay with a direct debit plan, you won’t have to write a check and mail it on time each month. And you won’t miss any payments that could mean more penalties. If you can’t use the IRS.gov tool, you can file Form 9465, Installment Agreement Request instead. You can view, download and print the form onIRS.gov/forms anytime.
  • Don’t ignore a tax bill.  If you get a bill, don’t ignore it. The IRS may take collection action if you ignore the bill. Contact the IRS right away to talk about your options. If you face a financial hardship, the IRS will work with you.

In short, remember to file on time. Pay as much as you can by the tax deadline. Pay the rest as soon as you can.

Contact C Fitts Tax Solutions at (803)470-4938 to find out more.

141 S. Shandon St. Ste. E | Columbia, SC 29205 | info@cfittstaxsolutions.com

There are 5 things phone scammers will do that the IRS will not…

“This is no April Fool’s joke. Everyone should be on the lookout for threatening calls from people faking IRS phone numbers and demands for immediate payment,” IRS Commissioner John Koskinen said. “These are scams. I urge taxpayers to stay vigilant and remain aware of the constantly changing tactics used by these criminals.”

They often leave “urgent” callback requests and sometimes prey on the most vulnerable people, such as the elderly, newly arrived immigrants and those whose first language is not English. Scammers have been known to impersonate agents from IRS Criminal Investigation as well.

Here are five things the scammers often do but the IRS will not do.

The IRS will not:
Call to demand immediate payment, nor will the agency call about taxes owed without first having mailed you a bill.

  • Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
  • Require you to use a specific payment method for your taxes, such as a prepaid debit card.
  • Ask for credit or debit card numbers over the phone.
  • Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.
  • IRS Issue Number:    IR-2015-62

  • Contact us at (803)470-4938 with questions or concerns.
  • C Fitts Tax Solutions | 141 S. Shandon St. Ste. E | Columbia, SC 29205 | Corner of Rosewood Dr.
  • info@cfittstaxsolutions.com

The date for many retirees to take required minimum distributions (RMD) approaches!

“Many Retirees Face April 1 Deadline to Take Required Retirement Plan Distributions”

The IRS released a reminder to taxpayers who turned 70½ during 2014 that in most cases they must start receiving required minimum distributions (RMDs) from Individual Retirement Accounts (IRAs) and workplace retirement plans by Wednesday, April 1, 2015.

The April 1 deadline applies to owners of traditional IRAs but not Roth IRAs. Normally, it also applies to participants in various workplace retirement plans, including 401(k), 403(b) and 457 plans.

The April 1 deadline only applies to the required distribution for the first year. For all subsequent years, the RMD must be made by Dec. 31. So, a taxpayer who turned 70½ in 2014 and receives the first required payment on April 1, 2015, for example, must still receive the second RMD by Dec. 31, 2015.

Though the April 1 deadline is mandatory for all owners of traditional IRAs and most participants in workplace retirement plans, some people with workplace plans can wait longer to receive their RMD. Usually, employees who are still working can, if their plan allows, wait until April 1 of the year after they retire to start receiving these distributions. Employees of public schools and certain tax-exempt organizations with 403(b) plan accruals before 1987 should check with their employer, plan administrator or provider to see how to treat these accruals.

The IRS encourages taxpayers to begin planning now for any distributions required during 2015. An IRA trustee must either report the amount of the RMD to the IRA owner or offer to calculate it for the owner. Often, the trustee shows the RMD amount in Box 12b on Form 5498. For a 2015 RMD, this amount would be on the 2014 Form 5498 that is normally issued in January 2015.

More information on RMDs, including answers to frequently asked questions, can be found on IRS.gov.

Taxpayers not expected to pay additional taxes based on corrected Form 1095-A.

Statement from a Treasury Spokesperson on Forms 1095-A

3/20/2015

WASHINGTON In light of today’s announcement—regarding additional incorrect information on certain Marketplace tax statements (Forms 1095-A)—the Department of the Treasury is expanding the relief it announced previously on February 24,which will mitigate any harm to tax filers.  Any individual who enrolled in qualifying Marketplace coverage, received an incorrect Form 1095-A, and filed his or her tax return based on that form does not need to file an amended tax return.  The IRS will not pursue the collection of any additional taxes from these individuals based on updated information in the corrected forms.  This relief applies to tax filers who enrolled through the federally facilitated marketplace or a state-based marketplace.

As before, some individuals may choose to file amended returns.  Treasury intends to provide additional information to help tax filers determine whether they would benefit from filing amended returns.  Individuals also may want to consult with their tax preparers to determine if they would benefit from amending.

Only a small fraction of tax filers received incorrect Forms 1095-A.  Treasury estimates that in the vast majority of these cases, the impact on an individual’s tax liability will be very small.

We continue to urge individuals who have been notified of errors on their Forms 1095-A and have not yet filed their tax returns to wait to file until they receive corrected forms.

You have until April 15, 2015 to contribute to an IRA for 2014!

Issue Number:    IR-2015-50

Tax Time Guide: Still Time to Contribute to an IRA for 2014

WASHINGTON — The Internal Revenue Service today reminded taxpayers that they still have time to contribute to an IRA for 2014 and, in many cases, qualify for a deduction or even a tax credit.

Though contributions to Roth IRAs are not deductible, qualified distributions, usually after age 59½, are tax-free. Those with traditional IRAs must begin receiving distributions by April 1 of the year following the year they turn 70½, but there is no similar requirement for Roth IRAs.

Most taxpayers with qualifying income are either eligible to set up a traditional or Roth IRA or add money to an existing account. To count for 2014, contributions must be made by April 15, 2015. In addition, low- and moderate-income taxpayers making these contributions may also qualify for the saver’s credit when they fill out their 2014 returns.

Eligible taxpayers can contribute up to $5,500 to an IRA. For someone who was at least age 50 at the end of 2014, the limit is increased to $6,500. There’s no age limit for those contributing to a Roth IRA, but anyone who was at least age 70½ at the end of 2014 is barred from making contributions to a traditional IRA for 2014 and subsequent years.

Eligible taxpayers get the credit even if they qualify for other retirement-related tax benefits. Like other tax credits, the saver’s credit can increase a taxpayer’s refund or reduce the tax owed. The amount of the credit is based on a number of factors, including the amount contributed to either a Roth or traditional IRA and other qualifying retirement programs.

Contact us for more information: (803)470-4938 or info@cfittstaxsolutions.com.