Posts Tagged "tax breaks"

Plan for the return of some tax break phase-outs

Posted on Dec 10, 2013

Are you familiar with PEP and Pease? Though they sound like a pop duo, the terms refer to tax rules known as phase-outs that can impact how much federal income tax you owe. Phase-outs are reductions in the amount of deductions, credits, and other breaks you can claim on your tax return. Though generally based on adjusted gross income, phase-outs vary in rate, amount, and how they’re calculated. Here’s an overview of PEP and Pease, two tax breaks that are once again subject to phase-out this year. * Personal exemption phase-out (PEP). If you’re married filing jointly for 2013 and your income exceeds $300,000, the PEP will reduce the amount you claim for yourself, your spouse, and your dependents. The personal exemption for 2013 is $3,900. But when PEP applies and your income increases, your deduction is reduced accordingly. * Itemized deduction phase-out. You probably already know that some itemized deductions are limited. For instance, to claim a deduction for medical expenses, your out-of-pocket costs for this year have to exceed 10% of adjusted gross income (AGI). This threshold remains at 7.5% of AGI if you are 65 or older. Miscellaneous itemized deductions, such as unreimbursed employee business expenses, are limited to amounts over 2% of AGI. * There’s also an additional phase-out called the Pease provision that limits the amount of total itemized deductions – after the above reductions. For 2013, Pease kicks in when your income exceeds $300,000 ($150,000 if you’re married filing separately). Other phase-outs limit the amount and deductibility of IRA contributions; the education, adoption, and childcare credits; and the alternative minimum tax exemption. Please call for a review of how phase-outs affect you and what you might be able to do to avoid them. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in the McLean and Tysons Corner, VA. Gilliland & Associates specializes known for our superior knowledge and aggressive interpretation and application of tax laws, we help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+ <https://plus.google.com/108764776146415485651/posts> , LinkedIn <http://www.linkedin.com/in/gillilandcpa> , Facebook <https://www.facebook.com/gillilandcpa> , and Twitter <https://twitter.com/dnggcpa>...

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Check the tax issues if you are caring for elderly parents

Posted on Dec 5, 2013

As the population in the U.S. continues to age, more and more people will find themselves caring for their parents. Here are some of the tax breaks that caregivers should consider. * If you provide more than half of your parent’s support, you may be able to claim your parent as a dependent on your tax return. To be eligible, your parent can’t earn more than $3,900 in 2013, excluding their nontaxable social security and disability income. * What if you and your siblings all pitch in to support a parent? Anyone who contributes at least 10% of the total support can be the one to claim the $3,900 exemption if all of you sign a multiple support agreement. * Even if a parent’s income exceeds $3,900 this year, you can still deduct the medical expenses paid on the parent’s behalf, as long as you provide more than half of his or her support. * If you hire someone to take care of your parent while you work, you might qualify for the dependent care tax credit. Your parent must be physically or mentally incapable of caring for himself. * Unmarried individuals who support a parent can file their tax returns as “head of household.” To qualify, your parent doesn’t need to live with you. Instead, as long as you pay more than half of the cost of maintaining your parent’s main home, including a rest home or nursing facility, you qualify for this preferential tax treatment. For more information about the tax issues affecting caregivers and their parents, please give us a call. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in the McLean and Tysons Corner, VA. Gilliland & Associates specializes known for our superior knowledge and aggressive interpretation and application of tax laws, we help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+ <https://plus.google.com/108764776146415485651/posts> , LinkedIn <http://www.linkedin.com/in/gillilandcpa> , Facebook <https://www.facebook.com/gillilandcpa> , and Twitter <https://twitter.com/dnggcpa>...

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Guide your children to financial maturity

Posted on Oct 1, 2013

Teaching your children about money and finances is easiest when you start early. Here’s a quick review of what you should teach your children at each age if you want them to become financially competent adults. Preschool – Skills to Teach * Identify coins and bills; learn what each is worth. * Understand that you can’t buy everything; choices are necessary. * Save money in a piggy bank. Grade School – Skills to Teach * Read price tags; learn comparison shopping. * Do money arithmetic; make change. * Manage an allowance; use it to pay for some of child’s own purchases. * Open a savings account and learn about interest. * Participate in family financial discussions about major purchases, vacation choices, etc. Teens – Skills to Teach * Work to earn money. * Budget for larger purchases. * Learn to use a checking account. * Learn about investing – stocks, mutual funds, CDs, IRAs, etc. * Share in financial planning (and saving) for college. College/Young Adult – Skills to Teach * Learn about borrowing money (interest, default, etc.). * Use credit card judiciously. * Participate in family estate planning discussions. Knowing about money – how to earn it, use it, invest it, and share it – is a critical life skill. It’s never too early to start teaching your children about financial matters. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in the McLean and Tysons Corner, VA. Gilliland & Associates specializes known for our superior knowledge and aggressive interpretation and application of tax laws, we help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+ , LinkedIn , Facebook, and Twitter.  ...

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Autumn tax tip

Posted on Sep 10, 2013

Review your tax deductions for 2013 while there’s still time to manage them for a lower tax bill this year. The standard deduction for 2013 is $12,200 for married couples filing a joint return and $6,100 for single taxpayers. If your deductions are close to the threshold, consider accelerating deductible expenses. For example, you can add sales tax paid on a new vehicle to the IRS standard amount when claiming the itemized deduction for state and local sales tax. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in the McLean and Tysons Corner, VA. Gilliland & Associates specializes known for our superior knowledge and aggressive interpretation and application of tax laws, we help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+ , LinkedIn , Facebook, and Twitter.  ...

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Retirement tax rules

Posted on Aug 13, 2013

Three important birthdays affect your retirement plan: * At age 50, you can make extra “catch-up” contributions to your IRA and 401(k) savings. For 2013, these are $1,000 and $5,500, respectively. * After age 59½, you’re eligible to make penalty-free withdrawals from your IRAs. * Beginning no later than the year after you reach age 70½, you’re required to take minimum distributions from your traditional IRAs each year. Need more details? Contact our...

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