Perry Webb, President of local accounting firm, Webtax, an enrolled agent licensed to practice before the Internal Revenue Service and a Registered Tax Return Preparer, offers insight and advice for the tax season. Check back each Monday for new tips!
Your traditional IRA Contribution may be tax-deductable. The deduction may be limited if you or your spouse is covered by a retirement plan at work or your income exceeds certain levels. The maximum amount is $5,500 or $6,500 if you are over 50 years old. You have until April 15, 2014 to make this contribution.
Remember to always keep detailed records of any charitable contribution. The date you made the contribution, the amount and/or the fair market value if it is not cash. The charitable mileage rate is 14 cents per mile.
To be able to use your medical deductions they must be at least 10 percent of your adjusted gross income if you are under the age of 65.
Eight Tax Savers for Parents
Your children may help you qualify for valuable tax benefits. Here are eight tax benefits parents should look out for when filing their federal tax returns this year.
1. Dependents. In most cases, you can claim your child as a dependent. This applies even if your child was born anytime in 2013. For more details, see Publication 501, Exemptions, Standard Deduction and Filing Information.
2. Child Tax Credit. You may be able to claim the Child Tax Credit for each of your qualifying children under the age of 17 at the end of 2013. 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 about both credits, see the instructions for Schedule 8812, Child Tax Credit, and Publication 972, Child Tax Credit.
3. Child and Dependent Care Credit. You may be able to claim this credit if you paid someone to care for one or more qualifying persons. Your dependent child or children under age 13 are among those who are qualified. You must have paid for care so you could work or look for work. For more, see Publication 503, Child and Dependent Care Expenses.
4. Earned Income Tax Credit. If you worked but earned less than $51,567 last year, you may qualify for EITC. If you have three qualifying children, you may get up to $6,044 as EITC when you file and claim it on your tax return. Use the EITC Assistant tool at IRS.gov to find out if you qualify or see Publication 596, Earned Income Tax Credit.
5. Adoption Credit. You may be able to claim a tax credit for certain expenses you paid to adopt a child. For details, see the instructions for Form 8839, Qualified Adoption Expenses.
6. Higher education credits. If you paid for higher education for yourself or an immediate family member, you may qualify for either of two education tax credits. Both the American Opportunity Credit and the Lifetime Learning Credit may reduce the amount of tax you owe. If the American Opportunity Credit is more than the tax you owe, you could be eligible for a refund of up to $1,000. See Publication 970, Tax Benefits for Education.
7. Student loan interest. You may be able to deduct interest you paid on a qualified student loan, even if you don’t itemize deductions on your tax return. For more information, see Publication 970.
8. Self-employed health insurance deduction. If you were self-employed and paid for health insurance, you may be able to deduct premiums you paid to cover your child under the Affordable Care Act. It applies to children under age 27 at the end of the year, even if not your dependent. See Notice 2010-38 for information.
Forms and publications on these topics are available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).
Webtax is a tax specialist and accounting company with 13 offices in and around the Charlotte area. Webtax is family owned and operated, providing the same great service today as they did when they opened their doors over 50 years ago. To learn more visit http://prep.1040.com/webtax or call 704-568-6421.
