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Published: Tuesday, April 17, 2018 @ 5:00 AM
The IRS says that it collected in excess of a staggering $3.3 trillion in taxes in 2016, the latest numbers available. That means people are forking over big money this time of year. Here’s some last-minute tips to help you make sure you’re paying your fair share, but no more:
If you simply don’t have the money to pay your taxes and it looks like you never will, you can apply for an “offer in compromise,” which allows the IRS to settle for less than the full amount you owe. Use this Offer in Compromise Pre-Qualifier tool to see if you are eligible for an offer in compromise.
If you have a dedicated space in your home that you use for business, you may be able to take advantage of the home office deduction. But you need to be careful. You have to figure out exactly how much square footage is dedicated to your business. Find out how to do that, plus 16 other ways not to be audited by the IRS.
Believe it or not, the IRS makes boo boos, too. If you believe there’s an error on your tax bill, the agency encourages taxpayers to write to the IRS office that sent you the tax notice. You can also call the number listed on the notice or bill. It’s important that you do this within the time frame stated on the notice.
As much as we like it when tax season rolls around and we’re in line for a big refund, it can turn ugly really quickly when we find out we owe the IRS. As with any sophisticated organization, the IRS offers many ways to pay. Those methods include debit or credit card, IRS Direct Pay online, the IRS2GO mobile app, E-filing, the Electronic Federal Tax Payment System or via check or money order.
They say few things are as certain as death and taxes, but tax scams should be right up there. One that is growing more prominent is the use of bogus tax refund checks. If you fall victim, keep in mind that you may have to close your bank account. You should contact your tax preparer and also your financial institution. Here are seven other tax scams to look out for.
Eager for your money? You’re not alone. Thankfully the IRS has made it easy to track when that tax refund is supposed to hit our account or mail box. To access this tool, visit irs.gov/refunds and click “Check My Refund Status.” You can also track a refund using the IRS2Go app, which is available for download from the App Store or Google Play.
We told you how NOT to get audited, but what happens when you do? Will agents in black suits and dark glasses surround your home or place of business? Not quite. Here’s a step-by-step of the process along with what you can do.
For many of us, it’s a nervous time of year, in part due to rumors and hearsay floating around. With that in mind, here are several common tax myths debunked.
Published: Tuesday, May 01, 2018 @ 2:08 PM
— A downtown Dayton office building near the federal building sold for just over $2.8 million today, according to local property records.
Titan Loan Investment Fund L.P. is identified as both the buyer and the seller for the May 1 transaction at 130 W. Second St. in downtown Dayton, according to Montgomery County property records.
The transaction is a sale to an investor named Brian Lash, a new owner coming into the market for this building, said Katie Doup, a Columbus-area spokeswoman with real estate firm CBRE. She said a fuller press release was being prepared now on Lash’s investment in Dayton and his plans.
Doup also said a second announcement on the sale of another Dayton building may be forthcoming in the near future.
The 22-story building at 130 W. Second was on sale with an asking price of $4.25 million, according to a LoopNet real estate listing. It offered a rentable building area of just over 326,000 square feet and was built in 1972.
Acadia, the Table 33 restaurant, IT firm DataYard and County Corp. are some of the building’s most notable tenants.
Published: Thursday, April 05, 2018 @ 11:46 PM
Updated: Thursday, April 05, 2018 @ 11:46 PM
— We get it. Doing your taxes is no fun, especially if you know you’re going to owe money. But as with any project on which you procrastinate, leaving everything to the last minute can lead to errors, both large and small, and some of those errors could cost you serious money.
If you’ve gone and done it, though, and are still looking at that pile of tax forms over there in the corner, we’ve compiled a list of six quick-and-dirty tips that could keep you from making some obvious, and not-so-obvious, mistakes when you finally sit down and tackle the task. They could also help you maximize your tax refund.
You might wonder how anyone could forget to sign their tax form, but this simple process is one of the most common tax mistakes, according to the IRS. Just like forgetting to sign a check or a contract, it means your return isn’t valid. Usually, there isn’t a penalty or interest associated with this error (since you’ve already included a check or electronic payment if you owed), so the IRS will just send a notice asking for a valid signature, but it will delay the processing of your return. If you’re getting a refund, that too will be delayed.
So check, double-check — heck, triple-check — that you signed or completed the e-signature process before filing your return. Also, check out these last-minute filing tips from the IRS.
Math errors are also a very common mistake made by folks in a hurry. Fortunately for most people, the IRS corrects any miscalculations, so there’s no need for filing an amended return. But these mistakes can mean the difference between you thinking you’re getting a refund and the reality that you actually owe taxes, so be sure to check your calculations carefully.
One way to help you avoid math errors is to file electronically so the calculations are done for you. Bye-bye, No. 2 pencil! So long, calculator!
Did you have a side hustle early last year? A freelance design gig for a friend’s business? If so, you’re going to need to account for it, regardless of whether you received a W-2 or 1099 from whomever paid you. That’s because, while there’s an IRS threshold for filing these documents by employers, there’s no similar threshold for claiming the income. Income is income is income. If you made money and don’t report it — and the IRS catches it — it’s going to cost you penalties and interest at best, and open you to a possible audit at worst.
It’s easy to forget these things when you’re in a hurry, but they can end up saving you some serious money and are well worth the extra time to figure out if you qualify. So if you’re just claiming the standard deductions because you’re under the gun, you might want to take a deep breath and check out TurboTax’s list of 10 commonly overlooked tax deductions that can keep you from overpaying the tax man.
Filing for an extension is a great idea if you’re down to the wire and don’t really understand your tax situation. But remember that an extension gives you an extra six months to file your paperwork, but not an extra six months to pay any taxes due. So, if you’re confused, tax pros recommend doing a quick calculation of your taxes, filing for your extension and making any required payment of taxes you think you owe. This will help you avoid penalties and interest once you get your final calculations together.
You gave up. You shoved, slammed and jammed your return through and now it’s full of mistakes that are going to cost you money by way of penalties or because you’ve left money on the table. It’s a much better idea to file the extension, then get the help you need from a tax professional to ensure you’re not overpaying your taxes.
Published: Thursday, April 05, 2018 @ 11:55 PM
Updated: Thursday, April 05, 2018 @ 11:55 PM
— If you claimed the right number of dependents and standard deductions on your 2017 federal income tax return and you still ended up owing the IRS, you’re probably looking to avoid a repeat performance next year. Luckily, there are several ways to increase your chance for a refund (or at least reduce the amount you’ll owe) and you don’t have to be a tax whiz or accountant to take advantage.
Here are 11 ways you can pay less in federal taxes for your income return next year.
Contributing to a retirement fund is an important way to ensure financial independence in your golden years, but it can also convey short-term tax benefits. In most cases, the contributions you make to your 401K and IRA plans are tax-deductible and are not included in your taxable income at the end of the year. (Note: If you didn’t contribute to an IRA in 2017, you still have time. You have until April 17 to contribute up to the maximum amount and shave off a good chunk of your tax bill. Filed your taxes already? That’s OK. You can file an amended return to reflect the contribution.)
There’s a distinct tax benefit to home ownership. The interest you pay on your mortgage is tax-deductible, and the interest is front-loaded. For the first several years, most of your mortgage payment goes toward interest, which will drastically reduce your adjusted gross income at tax time. Want an extra boost for your taxes next year? Consider paying January 2019’s mortgage payment in December to get a tax benefit before the end of the year.
You probably know charitable donations can be itemized and deducted from your income, so you’ll want to save receipts anytime you donate cash or items to charity. You can even deduct miles you travel for volunteering or other charity work.
“Miles you travel on behalf of a charity are deductible at 14 cents per mile for 2018,” said Gail Rosen, CPA.
Starting a home business can provide you with a new source of income and allow you to take deductions off any income the business generates.
These deductions include business costs you incur throughout the year, a portion of your mortgage and utilities if you use a home office and the cost of goods needed to keep your business running. You can even deduct startup costs.
“Any expenses that are incurred before the first sale are ‘start-up costs,’” Rosen said. “These costs cannot be deducted until the first sale. Then they are deducted over 15 years and you can deduct the first $5,000 in the first year.”
If you hunt for a new job in your field this year, you can write off some qualifying expenses as you search. There are exceptions, but potential write-offs include things like clothes or travel.
“If you looked for a new job in 2018, you should be aware of the income tax deduction that may be available with respect to job-search costs,” Rosen said. “Qualifying expenses are deductible even if they do not result in a new job being offered or accepted.”
Many employers offer flexible spending plans that let you contribute toward yearly medical expenses pre-tax. These contributions typically don’t count toward your taxable income.
Many medical and dental expenses are tax-deductible. According to Rosen, the cost of getting to and from medical treatment is deductible at 17 cents per mile, plus the cost of tolls and parking, and dependent expenses are also deductible.
“If you cover the medical cost of dependents, these can be deducted. Additionally, if you are covering the costs of an individual who would qualify as your dependent except that they have too much gross income — for example, an elderly parent — you may be able to deduct these costs as well,” said Rosen.
Current and former students have many eligible deductions and credits related to their education expenses. Paid student loan interest and tuition and fees can be claimed as deductions. Eligible current students can also access the American Opportunity Credit, which can cover up to $2,500 annually for four years, and the Lifetime Learning Credit, which can cover up to $2,000 per tax return.
Homeowners who install solar energy systems in their home can get back tax credits at up to 30% of the cost of installation. This credit will begin to decrease after 2019 so you may want to act soon if you’re planning on installing solar panels.
As an added bonus, solar energy can significantly reduce your energy bills.
We’ve named several tax credits above, but there are more, including credits for adopting children, the cost of child care and low-income households. Tax credits are more valuable than deductions, as they reduce your taxable income on a dollar-for-dollar basis, so make sure you’re taking advantage of every option.
Published: Monday, October 23, 2017 @ 11:27 AM
— Retirement can seem like a difficult goal to reach, so the thought of achieving it early may seem downright impossible.
But getting to retirement quicker doesn't require genius-level investing knowledge or extreme deprivation. With a plan, hard work and discipline, you may be able to get there sooner rather than later.
The following are five surefire ways to get to retirement quicker:
Set clear goals for yourself
Consumer adviser Clark Howard recently shared advice from Chris Reining, who decided in his late 20s that he wanted to retire early. By the time he turned 37, he was able to reach this goal.
Howard said he thought setting clear goals was one of the most important things that Reining did. He labeled his investment account "Retire early" so he could see the words every day. In addition, Reining tracked his progress by using a spreadsheet you can get on his website. He wanted to save up 25 times his annual expenses before retiring.
The Forbes Finance Council recommends working hard and being disciplined as the most reliable ways to retire early.
This can be achieved through a high-paying job combined with saving as much of your income as possible. Another path is starting your own business.
Forbes quotes a blogger who retired early and says that streamlining your spending is an important step toward achieving this goal. It's not glamorous or complicated, but it works.
He suggests scaling back on luxuries and investing your savings in a low-cost index fund. When you accumulate 25 to 30 times your annual spending in this type of account, you can quit working for the rest of your life.
Cut your housing expenses
If you're like most people, your home is your biggest expense, so it's also your biggest opportunity to save, according to Money.
Housing costs take up about a third of the average budget, so Money recommends not taking out the biggest mortgage you can get. Live in a more modest-sized home when possible, and in some cases, homeowners can purchase a two-family home, living in one side and renting out the other.
Put your money to work - wisely
CNBC talked to Scott Alan Turner, who had more than $70,000 in debt at age 25, yet managed to turn things around and retire by age 44.