Summertime tax savers
Summer may be one of the best times to review your taxes, because taking the time now could result in 2017 tax savings. Here are just a few tax-saving ideas to consider.
• If you and your spouse work and are considering sending your children to a summer day camp, the cost may qualify for the dependent care tax credit.
• Do you own a boat or recreational vehicle? As long as the vehicle has sleeping space, a bathroom, and cooking facilities, you may be able to claim it as a second home and deduct the interest payments on your loan.
• If you have vacation/rental property, you can control your tax deductions by changing the number of days you use your vacation home. In planning your vacations, be sure to find out how many days of personal use will lead to the best tax deductions on your property.
A handy guide to expensing roofing costs
Roof work can be a major project if you own commercial or residential property. Many people incorrectly assume that a substantial roof project should always be capitalized and depreciated. Often times, roofing costs can be 100% deducted in the year the work is completed. This article from a June 22 post in The Tax Advisor nicely lays out factors to evaluate in determining whether your roof work needs to be capitalized or if it can be expensed.
Each year, tax professionals who deal with real estate must evaluate the most recent building expenditures and determine which items should be written off as a repair expense or capitalized. The most common, and often significant, item that is evaluated is roofing-related work. In many cases, only a portion of the roofing system is replaced, and depending on the facts, those costs may be deducted as repairs. When compared to the alternative option of depreciating the cost over a 27.5-year life for residential rental real estate or a 39-year life for commercial real estate under the modified accelerated cost recovery system, an incorrect conclusion may lead to a significant overpayment of tax liability.
Children, taxes, and their new job
Is your child thinking about taking on a job for extra money this summer? If so, both of you may have questions about taxes. The following are a few tax tips to help you prepare.
For 2017, your child can earn as much as $6,350 and not pay a dime in federal income tax. If your child's earnings won't exceed this amount, consider having the child claim "student–exempt" when completing the "Federal Withholding Allowance Certificate" (Form W-4). As long as your child's total income doesn't exceed the $6,350 limit, he or she may not need to file a 2017 tax return.
Midyear tax planning more important than ever
Summertime usually makes us think of vacations, backyard barbecues, and general relaxation. Tax planning may not be on the top of your summertime to do list, but this year you may want to consider making time for it.
Major tax reform is being considered in Washington for the first time in thirty years. Current proposals include changes to the tax bracket structure, personal deductions, exemptions, and childcare credits.
Is your business waving a red flag at the IRS?
The chance the IRS will target your business for a federal tax audit is usually low. However, if your tax return for your business includes certain red flags, you boost your odds of being audited. Here are a few of the most common audit triggers that are likely to grab the attention of the IRS.
Continuous losses. If you report a net loss on a Schedule C in more than two out of the last five years, the IRS may consider your business a hobby. If deemed a hobby, you can deduct expenses only up to the amount of your hobby's total income. Enjoy rebuilding cars? Great. But if you never turn a profit, don't expect the IRS to consider it more than a hobby.
What's new in taxes: Tips for those getting married
If you are planning to get married this summer, or know someone taking the matrimonial plunge, here are some important tax tips every couple should know before they walk down the aisle.
Notify Social Security. Notify the Social Security Administration (SSA) of any name changes by filling out Form SS-5. The IRS matches names with the SSA and may reject your joint tax return if the names don't match what the SSA has on file.
Address change notification. If either of you are moving, update your address with your employer as well as the Postal Service. You will also need to update the IRS with your new address using Form 8822.