A capital gain or loss is the difference between the basis and the amount of money a tax payer gets when they sell an asset. The tax rate on a capital gain depends on the taxpayer’s income.  The capital gain tax rate varies from 0% to 28%. All capital gains must be included in the taxpayer’s income when they file their income taxes.  If a taxpayer’s income is above a certain level, they may be subject to the 3.8% Net Investment Tax.  If a taxpayer is subject to the Net Investment Tax, they must file Form 8960 with their tax return. Taxpayers can
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The Child Tax Credit may save taxpayers up to $1,000 for each eligible qualifying child. A child must meet several conditions in order to qualify for the child tax credit.  A list of the conditions is below: Age. The child must have been under age 17 at the end of 2015. Relationship. The child must be the taxpayer’s son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, or half sister. The child may also be a descendant of any of these individuals. A qualifying child can also include the taxpayer’s grandchild, niece or nephew. Adopted children always qualify
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Most taxpayers simply need to check a box on their 2015 tax return stating that all family members had qualifying health care coverage every month in 2015 and do not have to pay the Individual Shared Responsibility Payment. Exemptions from the Individual Shared Responsibility Payments may be granted.  To find out who qualifies for an exemption, click here.  If a taxpayer doesn’t qualify for an exemption, they must make an individual shared responsibility payment for every month they don’t have health insurance.  To find out how to report and calculate the payment, click here. Form 8965 needs to be filed with taxpayer returns if
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If you are a W-2 Employee taking the standard deduction or itemizing with basic deductions, you can typically file your own taxes without any trouble. If you are self-employed, own rental property or other investments, have children in college, have retirement income, or want tax planning for the future, a CPA can offer expert advice to help you maximize your deductions and minimize your taxes. If you have been missing deductions in the past, you have 3 years from the date you filed the original return to amend your prior return.  A CPA can help you with this process as well. If
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If Social Security is your only source of income, your benefits are typically not taxable. If you have other income in addition to Social Security, part of your benefits may be taxable. To find out if you must pay tax on your Social Security benefits, first determine the base amount for your situation.  You can determine your base amount by adding 1/2 of your other income (including tax exempt interest) to your Social Security benefit.  Then, compare your base amount total to the base amounts below. $25,000–base amount for single, head of household, qualifying widow, widow with a dependent child,
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If you are wondering if you should use the standard deduction or itemize, here are some tips that will help you. Standard Deductions for 2015 are as follows: Single $6,300 Married Filing Jointly $12,600 Head of Household $9,250 Married Filing Separately $6,300 Qualifying Widow(er) $12,600 To see if itemizing your deductions is more beneficial than the standard deduction, simply add up your deductible expenses including: Home mortgage interest Real estate and personal property taxes Gifts to charities including non cash donations mileage for volunteer work Casualty or theft losses Sales taxes — if you made a major purchase such as
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Exemptions cut your taxable income.  Taxpayers can claim an exemption for themselves, their spouse (if filing jointly), and their dependents.  There are rules about claiming exemptions and dependents.  If you claim a dependent on your tax return, that person cannot claim an exemption for themselves on their tax return.  Each exemption usually gives taxpayers a $4000 deduction.  The $4000 per exemption is subject to income limits. In addition to claiming children as exemptions, there are other tax savers for parents.  Parents may be able to claim a $1000 Child Tax Credit for children under the age of 17. Working parents or parents who
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The IRS had problems with their E-file system this week but it is operational again as of this afternoon. If you are due a tax refund, the IRS should still get it to you within 21 days of filing your return.  If you are missing a W-2 or 1099, you should contact your employer/client and make sure they have your correct address.  If you aren’t able to get help from your employer/client, you will need to contact the IRS.  More information is available here. The IRS continues to warn about phone scams.  The IRS will never call and demand payment.  If you
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If you or a family member didn’t have minimal essential health insurance coverage for any month in 2015 and that individual(s) didn’t qualify for an exemption, an individual shared responsibility payment will be due when you file your federal income tax return.  The individual shared responsibility payment is due to the IRS and not to any individual or your tax return preparer.  You can read more information from the IRS Health Care Tax Tip here. The amount due for the individual shared responsibility payment is reported in the “Other Taxes” section of your 1040EZ, 1040A, or 1040 return. On-line filing is
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The IRS recently posted tips for choosing a tax preparer.  The IRS list has information about credentials and qualifications as well as things to look for and avoid. Some things to look for are is your preparer will be available after the tax due date and if they will be able to represent you with the IRS if there are problems with your return. All paid tax preparers are required to have a PTIN and e-file all returns if the prepare more than 10 returns a year. The Better Business Bureau and State Board of Accountancy can let you know if the
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