10 Tax Benefits for Parents

Your kids can be helpful at tax time. That doesn’t mean they’ll sort your tax receipts or refill your coffee, but those charming children may help you qualify for some valuable tax benefits. Here are 10 things the IRS wants parents to consider when filing their taxes this year. [Read more…]

New Hire Retention Credit – FAQs

What is the new hire retention credit and what does it apply to?
This is a general business credit to encourage retention of new hires (retained workers). The employer may claim the credit for each retained worker. A retained worker is a qualified employee (as defined for purposes of the payroll tax exemption) who remains an employee for at least 52 consecutive weeks, and whose wages (as defined for income tax withholding purposes) for the last 26 weeks equal at least 80% of the wages for the first 26 weeks. The amount of the credit is the lesser of $1,000 or 6.2% of wages (as defined for income tax withholding purposes) paid by the employer to the retained worker during the 52 consecutive week period.  Here is a worksheet to aid you in providing information to us.

If an employer chooses to claim the WOTC for a qualified employee, can the employer still claim the new hire retention credit for that qualified employee?
Yes, an employer may claim the retention credit for a qualified employee even if the employer has also claimed the WOTC for the same employee. [Read more…]

Credit for Small Employer Health Insurance Premiums

Again for the 2011 tax year, the IRS is allowing up to a 35% tax credit to eligible small employers for health insurance premiums paid for employees.  Below is a general summary of who would qualify for this credit.  These are general requirements to let you know if you might possibly qualify and the specific requirements can be found in the attached instructions for Form 8941.

You are an eligible small employer for the tax year if you meet the following requirements: [Read more…]

Payroll Tax Cut – Temporarily Extended into 2012

President Obama today signed into law a two month extension of the payroll tax cut, which means that 160 million American workers will not see their paychecks shrink starting Jan 1, 2012. The President thanked Congress for ending the stalemate and urged them to keep working to reach an agreement [Read more…]

Tax Credits & Deductions for Education

The IRS reminds students or parents of students paying for tuition and other fees to keep good receipts and be aware of some of the tax benefits to help offset those costs.  Typically these benefits apply to you the taxpayer, your spouse or any dependent you can claim as an exemption on your tax return.  The professionals at Loggins & Associates can help you determine which educational credit or deduction will work best for your individual situation.  Take a look at this list and give us a call today!

 

  1. American Opportunity Credit – This credit, originally created under the American Recovery and Reinvestment Act, has been extended for an additional two years – 2011 and 2012.  The credit can be up to $2,500 per eligible student and is available for the first four years of post secondary education.  Forty percent (40%) of this credit [Read more…]

Tax-Saving Ways to Plan for College

Paying for college is one of the greatest financial worries most parents endure.  Aside from your own retirement, college tuition is probably the biggest expenses you will ever face.  It takes planning, research and belt tightening (and maybe some debt) to provide a college education for your children.  Funds will likely come from three sources:  savings, financial aid and tax relief.  Most importantly, you should not save for college at the expense of your retirement savings.  Many organizations, including the federal government, are willing to help your child pay for college.  However, no one is likely to give you a hand-out if your retirement fund comes up short.  Also a qualified retirement fund will not count against you when applying for financial aid.

Investments & Savings – It pays to start early and compound interest.
Allocate your assets based on the age of your children to make sure the money is available when you need it.  If your children are very young (under 11), invest for long-term growth with a large portion in the stock market.  Despite market fluxations, stocks provide the best results over the long-haul if started early enough.  Before your children reach their teens, you may [Read more…]

6 Money Saving Tips for College Freshmen

While there are a variety of tax-saving ways to save for college, tuition is only part of the financial burden.  Parents of Freshmen are often caught off-guard by costs that are above and beyond standard tuition.  Most Freshmen are required to live in college dormitories their first year; if you’re in a dorm, you have to purchase a meal plan.  You’ll need to decorate your dorm room, equip it with appliances and electronics.  Your Freshman will need a computer, most likely a laptop or tablet, books and supplies for classes, plus a college-friendly wardrobe.  Before you know it, you’ve racked up thousands of additional expenses you hadn’t thought of.  Here are some tips to cut expenses not only during the first year, but throughout the college experience.  Remember every cent you save is worth the effort!

Home or Close to Home
The easiest (and probably least popular) option is to live at home.  In most cases, this eliminates the need for many Freshman purchases since there will be no need for dorm furnishings and a meal plan.  The next best option is to choose a college or university that is close to home.  Staying close to home (at least in the same state) means no out-of-state tuition and reduced travel costs to come home for a visit.

Don’t Come Home Too Often
Most Freshmen feel that their college experience has to include transportation.  For some that may mean adding a new or used vehicle.  Some students may already have a car, [Read more…]

An easy-to-get tax credit for EVERYONE!

Hi, everyone —

I wanted to let you know about a tax credit that is super easy to get and is available to almost everyone.

This is a credit, not a deduction.   Don’t know the difference?  Check out this article.  Also, this credit (as of now) is only good for 2011 — you have to do this THIS year…not next year when you are working on your taxes.

Of the many energy-saving provisions in the Code, few are more accessible to ordinary taxpayers than the $500 credit for nonbusiness energy property. The Code Sec. 25C credit can apply to relatively inexpensive, easy-to-do (perhaps even do-it-yourself) items—the installation of insulation (e.g., exterior caulking and weather-stripping), doors, and windows—as well as slightly more expensive but standard items such as central air conditioning and heat pumps. However, currently this credit only applies through 2011, and the prospects for an extension are uncertain. As a result, homeowners should consider accelerating energy-saving home improvements into this year if doing so will generate a credit.

The nonbusiness energy property credit, as most recently extended, applies only through Dec. 31, 2011. A taxpayer can claim a credit on Form 5695 equal to 10% of the cost of: (1) qualified energy efficiency improvements, and (2) residential energy property expenditures.  There is a lifetime credit limit of $500 (with no more than $200 due to windows and skylights) over the total credits allowed to the taxpayer for all earlier tax years ending after 2005. The expenses must be for property originally placed in service by the taxpayer and made on or in connection with a dwelling unit located in the U.S., and owned and used by taxpayer as his principal residence at the time of installation.

Qualified energy efficiency improvements are energy efficient building envelope components, such as (a) insulation materials or systems specifically and primarily designed to reduce heat loss/gain that meet criteria set by the International Energy Conservation Code (IECC); or (b) exterior windows, skylights or doors, or any metal roof with pigmented coating or asphalt roof with cooling granules specifically designed to reduce heat gain, installed on a dwelling unit that meet Energy Star program requirements. The component must be expected to last for at least five years.  This requirement is met if the manufacturer offers a two-year warranty to repair or replace at no extra charge.

Residential energy property expenses are expenses for qualified energy property (including labor costs for onsite preparation, assembly, or original installation) that meets specific standards set out in Code Sec. 25C(d) . The credit allowed for energy property expenditures can’t exceed:

… $300 for any energy-efficient building property (electric heat pump water heater, electric heat pump; central air conditioner; natural gas, propane or oil water heater; or a stove burning biomass fuel to heat or provide hot water to a taxpayer’s residence in the U.S.) that meets specific energy efficiency standards;

… $150 for a qualified natural gas, propane, or oil furnace; or qualified natural gas, propane, or oil hot water boiler; or

… $50 for an advanced main air circulating fan.

There’s no credit for expenditures made from subsidized energy financing.

Extension history. The nonbusiness energy property credit, as added by the Energy Tax Incentives Act of 2005 (Energy Act, P.L. 109-58, 8/8/2005), originally applied for property placed in service after 2005 and before 2008. Thus, it only applied for 2006 and 2007. Like many credits, it was extended (with certain modifications), but only after 2008 had come and gone. The credit, as extended by the Emergency Economic Stabilization Act of 2008 (EESA, P.L. 110-343, 10/3/2008), skipped 2008 and was available for property placed in service after 2008 and before 2010. The credit was once more extended (through 2010), as well as increased, broadened, and liberalized by the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5, 2/17/2009). The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (2010 Tax Relief Act, P.L. 111-312, 12/17/2010) provided the most recent extension of this credit—a one-year extension until the end of 2011.

Arguably, such a long history of extensions might indicate the likelihood of further extensions. But while still a valuable credit for homeowners, the final extension through 2011 demonstrated a more parsimonious attitude by Congress towards the credit. Thus, the nonbusiness energy property credit available in 2011 consists of a 10% credit, instead of what had previously been a 30% credit. In addition, a taxpayer’s lifetime maximum nonbusiness energy property credit is no longer the previous $1,500. Instead, it is now $500 (of which no more than $200 may be for expenditures on windows). Further, the credit is no longer available for expenditures from subsidized energy financing.