Rapid Tax

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A Different Sort of Tax Holiday

Posted by Tax Advisor on December 13th, 2011

Six tips to lower your tax bill during the holiday season

December’s no time to forget about taxes! Follow these tips to maximize your tax savings while you celebrate.

  • Plan tax deductible travel

Dreading that expensive trip to Grandma’s? Schedule a meeting with a client or vendor on the way and the travel there and back is tax deductible. Family visits are so much better when part of the trip’s on the IRS.

  • Treat yourself (to a tax deductible gift)

The holidays aren’t just a great time to give to others, they’re also a great time to buy yourself that something you’ve been craving all year. And if that present is tax deductible, you save money on your taxes too!

Most tempting are tech toys such as iPads and smartphones. You can deduct electronic purchases if you are self-employed, have a hobby that generates income, or work for an employer that won’t cover business expenses.

The IRS is pretty strict with equipment purchases, so it’s important you be able to demonstrate that you use the equipment at least 50% of the time for business, and that it’s a usual and necessary expense, given your line of work.

Note that if you are an employee of a business that doesn’t cover equipment purchases, you can only deduct expenses that exceed 2% of your household’s AGI. Read the rest of this entry »

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A Number of Income Tax Deductions and Credits Set to Expire

Posted by Tax Advisor on December 7th, 2011

You can save money on your 2011 taxes with these soon-to-be-extinct tax breaks!

Think it’s too late to save on your 2011 taxes? Think again! Here are six deductions and tax credits that will be gone by the end of the year:

  • Energy Efficiency Tax Credit

Making energy-efficient upgrades to your home isn’t just a great way to cut down on heating and cooling costs, it can get you a tax credit too.

If you add more insulation to your attic or buy an energy-efficient appliance, among other possible improvements, you can apply for a tax credit. For a full list of qualifying improvements, refer to the Energy Star website.

The tax credit is worth 10% of the cost of these improvements.

But note that there is a $500 lifetime limit on this credit, so if you’ve taken advantage in previous years, you may not be able to do so again.

Congress has made some changes to the rules governing these credits for 2011. Go here for a full summary of the changes. Read the rest of this entry »

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Volunteer to Give Federal Income Tax Return Help to Disadvantaged Taxpayers

Posted by Tax Advisor on November 28th, 2011

You can help low-income people in your local community get their full refund when they file taxes for 2011. Find out how!

As the season to file 2011 taxes inches ever closer, most people are preoccupied with getting their own financial house in order. But even in the tax world, Thanksgiving can be a great time of year to give back.

For instance, did you know that although it is often portrayed as the big bad wolf of personal finance the IRS in fact gets millions of disadvantaged people free income tax help every year through its Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs?

IRS volunteers assist low-to-moderate income taxpayers, senior citizens, people with disabilities, and non-English speakers who all make less than $50,000 and often suffer significant financial hardship.

As the vast majority of these disadvantaged citizens are due a refund, helping them file can get them money that could have a significant positive impact on their lives. In short, it’s a worthy cause. Read the rest of this entry »

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The 2011 Earned Income Tax Credit: What is it?

Posted by Tax Advisor on November 23rd, 2011

Before you file 2011 taxes, make sure you’re familiar with all the credits that could save you money.

Basically, the Earned Income Credit is a tax credit designed to put money in the pockets of moderate to low income individuals. It can reduce the amount of tax you owe and even give you a refund.

One of the ways you could potentially save money on your taxes is through the Earned Income Credit (EIC).

You may be eligible to take the 2011 Earned Income Credit if

  • You earn less than $43,998 ($49,078 if married) and have 3 or more children
  • You earn less than $40,964 ($46,044 if married) and have 2 children
  • You earn less than $36,052 ($41,132 if married) and have 1 child
  • You earn less than $13,660 ($18,740 if married) and have no children Read the rest of this entry »

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2012 Tax Brackets

Posted by Tax Advisor on November 21st, 2011

The IRS gives us a sneak peak of new federal income tax brackets for the year 2012

Fall is an exciting time of year for the tax obsessed because we get our first glimpse at the 2012 tax brackets! That’s right – it’s not even time to file our 2011 taxes and already we get a sneak peak of what lies beyond.

Last year the unveiling of the federal income tax brackets was a bit more exciting because of the raging Congressional battle over the extension of the Bush tax cuts. As late as December, it was still unclear what the brackets and rates would look like for 2011.

This year, on the other hand, it’s been pretty standard, even if the expiration of the cuts in 2012 promises some tax fireworks next year. Read the rest of this entry »

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Income Tax Exemptions

Posted by Tax Advisor on November 10th, 2011

2011 personal exemptions can help you get unclaimed IRS money

With the 2012 tax season less than two months away now is the time to brush up on your tax knowledge. One of the most fundamental things you should know about when filing your return is how to claim income tax exemptions.

An income tax exemption allows you to deduct a certain amount of money from your Adjusted Gross Income, thus reducing the total amount of money on which you must pay taxes. Let’s put it this way: income tax exemptions save you money.

And, as it turns out, the federal government holds on to millions of dollars in unclaimed deductions every year. So it’s important to claim every deduction that applies to you in order to keep all of the money you’re entitled to. Read the rest of this entry »

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Changes to the Estate Tax for 2011

Posted by Tax Advisor on October 14th, 2011

The death tax is back, but it’s not as high as it could have been

The 2010 tax year isn’t behind us yet. For those who opted for an extension, the deadline is this Monday, October 17. But this should not prevent us from llooking ahead to the next tax year. After all, returns can be filed as early as January and many people are already wondering what 2011 tax changes are in store.

The short answer is that there are very few 2011 tax changes at all. Thanks to the dramatic, last-minute December compromise in Congress, the Bush tax cuts were extended through 2012. That means that tax rates will stay pretty much the same (the brackets have only been adjusted slightly to adjust for inflation). Read the rest of this entry »

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How to Lower Your 2010 Taxes

Posted by Tax Advisor on October 13th, 2011

There’s still time before October 17 to save on your 2010 taxes

With the October 17 deadline for 2010 taxes less a week away, you may be wondering what, if anything, you can still do at this point to lower your 2010 taxes. Well, rest assured, there are a few more steps you can take to minimize the amount you fork out to Uncle Sam next week.

Accelerate Your Deduction for Equipment Purchases:

If you are self-employed and purchased equipment, such as computers, software, or furniture, you can deduct these costs when filing 2010 taxes. Normally they are spread out over several years, but if you really want to lower your 2010 taxes, you can opt to accelerate the deduction and accrue all of the benefits this year.

You can accelerate the deduction for these purchases through bonus depreciation by taking a Section 179 deduction. Doing so could mean both lower income taxes and lower self-employment taxes. Just note that while such an acceleration could very well mean lower taxes for 2010, it will also mean a relatively higher tax burden over the next few years. Read the rest of this entry »

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Where’s My Tax Refund?

Posted by Tax Advisor on October 4th, 2011

How to check the status of your 2010 tax refund from the IRS

You did your part. You filed your taxes and now you’re waiting on the refund. It’s an age-old question, the one that inevitably follows the sublime exhaustion of finally getting your return off to Uncle Sam: Where’s my 2010 tax refund?

First, take note that even under the best of circumstances, your tax refund is going to take some time: typically 8-15 days for direct deposit e-filers, 3 weeks for paper check e-filers, and up to 6 weeks for filers by mail.

If your tax refund is taking a long time or you are just curious about its status:

  • Go to the IRS website and use the Where’s My Refund? tool. All you have to do is pop in your social security number, filing status, and refund amount to get a status update.
  • Alternately, the IRS has an app, IRS2Go, for the iPhone and for Android that let’s you check your refund status on the go.
  • Or call the IRS Refund Hotline at 800-829-1954. Read the rest of this entry »

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The Deadline to File Taxes for 2010 is Fast Approaching

Posted by Tax Advisor on September 20th, 2011

If you requested an extension, make sure to file your 2010 taxes before the October 17 deadline

Attention! Tax deadline approaching! If you’re one of the people who requested a six month extension way back in April to file your individual 2010 tax return, then Monday, October 17, 2011 is the deadline for filing federal income tax online.

2011 has been the year of delayed tax deadlines. Thanks to the special District of Columbia holiday Emancipation Day, the regular deadline to file taxes 2010 was pushed back from April 15 to April 18. And now the deadline for extension filers is pushed back as well. Normally the IRS gives you until October 15, but since this year the 15th happens to fall on a Saturday, you’ve got until Monday the 17th.

Even though you’ve got a few extra days to prepare those returns, don’t let the delayed deadline lull you into procrastination. The October 17 income tax deadline is right around the corner, only a month away in fact. If you don’t want to get caught in a rush at the last minute, now is the time to get your paperwork in order and start preparing your return. Read the rest of this entry »

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