It's Tax Preparation Time!!!
Wow, Where did the month go? First it was HAPPY NEW YEAR, and now it's almost the end of January 2014.Now,that the Holiday Season is far behind us, the month of January provides a welcome breather for busy schedules, but hold on, before you spend all your free time sprawling on your sofa, it's time to take a jump start on filing your taxes.
This is the time to gather your W2s, 1099s, Other Earned Income Statements, Contribution Statements, Receipts, Bank Statements and other important documentation, so even though the IRS states that Tax Filing will begin on January 31st 2014, because it needs extra time to ensure that the systems are in place and working properly, We still need to get ready and prepare ourselves.
We want to give you some tips on what to look out for as you get ready to file your taxes. We all know, that there are some New Tax Filing changes:
Look for Every Possible Deduction: Some of the most commonly overlooked ones are charitable contributions, Student Loan Interest, Job Hunting Costs and State Taxes Paid last year.
- It is worthy to note that many credits and deductions for Education were extended for 2013 returns, among which is the American Opportunity Credit, which is up to $2,500.
- The Personal Exemption is $3,900; Standard Deduction is $12,200 for Married Tax Payers filing jointly, $6,100 for Singles and $8,950 for Heads of Households.
- Tax Payers will still be able to deduct their medical expenses, but it will be more difficult for many to qualify. The threshold for deducting Medical Expenses now stands at 10% of adjusted Gross Income, which is up from 7.5 percent.
- Among the other changes, Tax Payers who work at home will now have a simplified option for taking a Home Office Deduction. Starting with 2013 returns, if you are eligible for this deduction, you can take a Standard Deduction of $5 per Square foot, up to 300 Square Feet. The Maximum Deduction using this method is $1,500.
- The Deduction for Business Use of a Car has also been simplified; you can use your actual costs or the IRS mileage rates. The standard mileage rate for Business Use of a Car in 2013 is 56.5 cents a mile, up from 55.5 cents.
- If you made Energy Efficiency improvements to your Home, such as Installing New Windows or a Qualifying Furnace or Heat Pump, you might be able to take an energy credit of 10% of the cost up to a lifetime maximum of $500,hence of the total, the IRS states "Only $200 can be for Windows,$50 for any Advanced Air Circulating Fan,$150 for any Qualified Natural Gas, Propane or Oil Furnace or $300 for any Item of Energy Efficient Building Property.
Rapid Refunds: If you expect a Refund, the earlier you file, the earlier you will typically receive it. Using the refund to pay off interest-bearing debt is even more of a Plus.
Planning Ahead: For those who owe taxes, earlier filing means more time to budget and set aside what will be due. Even if you file early, you still have until April 15th to submit your Payment.
Double Check: If you prepare your own return, Completing it before the Deadline provides ample time to check and double-check your work to ensure that everything is correct before you file.
Ensure that your Social Security/ Numbers/Individual Taxpayer Identification Numbers (ITIN) are entered correctly and the returns are signed. Those who feel that they need more time can apply for extension, until October 15th, but if you do file for an extension, remember to estimate and Pay any Taxes Due or you will face possible Penalty.
We hope that these tips will guide and help you in your Tax preparations, Do you Need Help in checking your Reports and ensuring that everything is entered correctly and adequately reconciled? Do you Need Help in getting your Charitable Contributions ready? Do you Need Help in ensuring that all your Receipts and Invoices are correctly accounted for into your system, Remember that the more accurate your transactions are, the more deductions you can claim and invariably, the more accurate your Tax Returns will be.
Why Don't you give us a call on 202.422.4586 or Email Us, to see how we can further assist you. We would love to hear from you.