Quick Tax Tips for Single Parents

Being a single parent can bring its own unique challenges and concerns in life, but filing taxes shouldn’t be one of them!

Here are some basic things to consider before filing your taxes this year.

Dependents:

Determining who you claim as dependents affects your ability to receive some credits and deductions. In a separation or divorce, this is usually a stipulated agreement between the two parents. However, the both parents can benefit if the parent who normally claims the child agrees to sign a waiver allowing for the non-custodial parent to make the claim. While you cannot split the deduction for a single year, parents can alternate years making the claim or only claim certain children if there are more than one. Remember that a child can only be a dependent if the child has lived with a parent for at least six months out of the year and was financially supported from that parent.

Head of Households:

You can file as head of household if you were not married on December 31, 2014, your kids live with you for at least 50% of the year, and you earn at least 50% of your household income. Head of household status will allow you a lower tax rate and higher deductions.

Exemptions:

For every dependent child you are allowed to deduct $3,950 for 2014. Head of households earning $275,650 or more are phased out.

Tax Credits:

Single parents earning $75,000 adjusted gross income or less can take $1,000 off their tax bill for each dependent 16 and younger in 2014.

Child Care:

Head of households who have an income or are full-time students can claim up to $3,000 per child for qualifying health care. This includes day care, summer day camps, and after school programs. Phaseout starts at $75,000 for single head of household filers.

Earned Tax Income Credit:

The maximum credit is $6,143. If you have three or more children and earn less that $46,997 as a single parent you can take this credit. If you have two children you can still qualify if you have a smaller income.

We hope this will help you begin to file your taxes! For all your tax preparation and tax debt needs call 888-737-0200. The tax experts at Advocate Tax Solutions are here to be your one stop shop for every tax question and problem. Visit www.advocatetaxsolutions.info for more information today!

The New Tax Laws in 2015 That Could Affect You

Every year the U.S. tax code undergoes changes that can affect the amount we owe the IRS. Knowing and planning for these changes can help you save money and confusion this year.

Here are some key changes to be aware of.

401 (k) Contribution Limits

For the past two years, 2013-2013, the contribution limit for 401 (k) retirement account was fixed at $17,500 plus another $5,500 “catch up”. This year the amount has risen to $18,000 with a $6,000 catch up for those 50 years of age and above.401 (k)s, or employer-based retirement plans can be a powerful savings builder. In order to qualify for the catch up contributions you must be of age or turn 50 any time during 2015.

IRA Deduction Eligibility

While IRA contribution limits will remain the same in 2015 ($5,500 plus a $1,000 catch-up for those 50 and older), the deduction for taxpayers making contributions to a traditional IRA is more generous. Here’s what the IRS states, “The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $61,000 and $71,000, up from $60,000 and $70,000 in 2014. For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is $98,000 to $118,000, up from $96,000 to $116,000. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $183,000 and $193,000, up from $181,000 and $191,000. For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.”

Roth IRA Eligibility

The Roth IRA’s eligibility is also expanding. The AGI phase out range has risen from being between $181,000-$191,000 in 2014 to $183,000-$193,000 in 2015 for married and filing jointly couples. For taxpayers filing as single and head of households, the range has risen from $114,000-$129,000 to between $116,000-$131,000.

IRA Rollovers

Beginning this year, taxpayers will only be able to execute one IRA rollover per year. A rollover involves removing money out of one IRA and putting it into another IRA after holding it for less than 60 days.

myRA

The myRA, my Retirement Account, is a new retirement account created by the U.S. Department of the Treasury, designed to be offered through employers. The myRA doesn’t have any fees and offers modest, guaranteed growth, ensuring that you won’t lose any money. A myRA account can be started with as little as $25 and you can add a minimum of $5 at a time. The contributions levels for myRA are the same as for IRAs ($5,5000 with a $1,000 catch-up). Once your account reaches $15,000 it has to be transferred into a private sector Roth IRA.

SEP IRA Contribution Limits

For taxpayers who are self-employed, contribution limits rise to $53,000 in 2015 and compensation limits rise to $265,000. These limits apply to solo 401 (k)s as well.

SIMPLE IRA Contribution Limits

In 2015, you will be able to contribute as much as $12,500 plus a $3,000 catch up if you are 50 and older.

Health Savings Account Eligibility

This year you will no longer be eligible for a Health Savings Account if you forward any FSA money. This new rule has confused many people. You can read more here or contact your tax professionals.

Health Insurance Penalty

The penalty for opting out of healthcare coverage has risen this you. In 2014, the penalty for opting out of the “minimum essential coverage” had a penalty of 1% of their income above the tax filing threshold ($95 per adult, $47.50 per child, and a $285 family maximum. For 2015, the penalty has doubled to 2% of your income ($325 per adult, $162.50 per child, and a family maximum of $975). The penalty will continue to rise in 2016.

While these new tax laws are the ones that will most likely affect you, there are many other new tax laws in 2015 that are worth learning about as well. If you have questions concerning the new laws and how they affect you contact your tax team at 888-737-0200 or visit http://www.advocatetaxsolutions.com

Planning for the Future: Non-conventional Uses for a 529 Plan

If you have kids you know they can be expensive and planning for their education can be overwhelming.

The cost of college tuition has risen at an average amount of roughly 8% per year over the last few decades. For example, the tuition at the University of Pennsylvania, a private undergraduate school, was $2,770 in 1960. In today’s dollars, that’s $22,219.24 and in a half century it will cost nearly three times that at $61,800!

Luckily, 529 Plans, or Qualified Tuition Programs (QTPs), offer families a way to save for their kids (and their own) future. 529 Plans offer significant tax benefits by allowing for the prepayment of qualified higher education expenses at eligible educational institutions. This allows you to lock in the rate of your kids’ college rate at the current number. So while rates are always increasing, there are no federal taxes on your contributions’ earnings. There are often no state taxes either if you are a local resident and if your child attends an in-state college.

The benefits don’t even end there. Here are some creative ways you can use your 529 plan.

1. Pay for Your Own College Expenses

If your child receives a scholarship or decides not to attend college, you can use any 529 funds toward your own educational expenses. Most plans allow you to change the beneficiary once a year, allowing you to transfer the funds to yourself. If you’ve held off on furthering your own education this is a great way to save on your own college expenses.

2. You don’t have to use the 529 plan on a traditional four year school.

529 plans can be used for two-year Associate Degree programs, technical schools, trade schools, vocational schools, and even for study abroad — as long as it’s with an accredited institution.

3. Benefits for Multiple Beneficiaries

Since you can change beneficiaries yearly, you could technically fund multiple beneficiaries with a single plan. If you have more than one child, and if you want to further your education, you can contribute to all of the beneficiaries’ education with a single plan.

4. Plan for the Distant Future

529 beneficiaries can be anyone you choose. You can help protect your family’s future generations by including your grandchildren and even their children. This way you can ensure your legacy is secure.

5. You can pay for non-qualified expenses with a poorly performing plan.

If you end up in major financial difficulties and need to pay for non-educational expenses , you may withdrawal from a plan if it is in the red without any penalties.

Start planning your little ones’ and your own future now! 529 Plans will help you secure your future and legacy. We know that taxes can be the worst. Planning ahead can help you avoid large tax costs in the future. If you need help with your 529 plan or current back tax debt our reputable tax experts at Advocate Tax Solutions are your qualified tax resource to solve your tax problems.

Call 888-737-0200 for all your tax questions or visit us online at www.advocatetaxsolutions.com 

This Tax Season Could Be One of the Worst

This tax season is predicted to be the worst in years for both the IRS and for taxpayers. Nina Olson, the national taxpayer advocate, believes it could be as bad as 1985, which lost returns and delayed refunds due to a computer failure.

This year it is a potential disaster because the IRS budget keeps getting smaller and the tax code more complicated. This is also the first year the IRS will have to administer premium tax credits, the Foreign Account Tax Compliance Act and individual mandates under the Affordable Care Act.

While firsts are never perfect, the IRS has limited resources due to budget cuts. Congress has dropped the IRS budget by 10% in the past five years, and has not accounted for the cost increases.

While the number of taxpayers has grown by about 7 million people, the number of IRS personnel has dropped by 8%.

IRS Commissioner John Koskinen warned that refunds may be possibly delayed and that there will be less taxpayer service.

According to CNN, Olson “estimates that 47% of the calls coming into the IRS probably won’t be answered during the filing season. The other 53% of people lucky enough to get through will have to wait an average of 34 minutes to talk to a human being.”

Koskinen promises the IRS will keep everything running as smoothly as possible, but the agency will still be stretched thin.  “All we can try to do is maximize the resources available in that January to May time frame to make sure that … we do as well as we can. And ‘as well as we can’ is still going to be miserable,” he said.

If that misery includes greatly delayed refunds, Americans won’t like it. Currently Americans have one of the best tax compliance rates in the world and it would costs the government billions if that was to change.

We hope this tax season isn’t as miserable as it’s predicted to be! It may be best to start filing your taxes as soon as possible. Since the tax code is increasingly complex this year, it could be a good idea to consult a tax professional. At Advocate Tax Solutions, our tax consultants will prepare this year’s taxes for you as well as file any prior year’s unfiled tax returns. For all your tax preparation, accounting, and back tax questions call your tax representatives at 888-737-0200 or visit www.advocatetaxsolutions.com.

Tax Tips for the End of the Year

April 15 may seem far off, but we have some end of the year tax tips that will make your life easier this year.

1. Don’t forget your deductions or credits

 

• Don’t forget your expenses or what you did during the year, for example giving away unwanted clothes to charity or doing a 5k, they can add up to some nice deductions.

 

• If you have dependents look at the Earned Income Credit Calculator on our website at https://www.advocatetaxsolutions.com/tax-calculators. If your wages and self-employment income fall below a certain level, you can earn deductions and credits based on how many dependents you have. You can also claim the Child Tax Credit-up to $1,000 if you have children under 17.

 

• If you are energy efficient and have installed the Energy-Star approved solar-power systems before the end of 2016, you can claim 30% of the cost as a tax credit for that year.

 

• If you have been unemployed in 2014 and had job searching costs, you may be able to deduct them.

 

2. If you didn’t have health insurance this year  This is the first year most Americans are required to have health coverage. If you were uninsured for 3+ months, you may not qualify for an exemption and may get hit with a tax penalty for 2014.

 

3. Check your withholdings Individuals should periodically check their withholdings to ensure they are in line with their true tax liability. Certain life changes like marriage and having a child will change your tax liability. That would be a good reason to adjust your tax withholdings.

 

4. Don’t NOT file your taxes Always file your taxes by the original or extended due date, even if you cannot pay. Late-filing penalties are worse that late-payment penalties.

 

5. Sometimes you need to consult a tax expert The tax code is an infinitely complex and can be extremely confusing and anxiety provoking. So it’s understandable to want to get professional tax help. Every year the tax law changes and its thresholds are adjusted. If you don’t know the law and how it applies to you, consulting with someone who’s up on the tax code is a good idea.

If you need help let the tax professionals at Advocate Tax Solutions know! All estimates are free, confidential, and guaranteed. Our tax professionals have years of experience negotiating with the IRS and representing thousands of clients.

 

Name(required)

Email(required)

Phone(required)

Amount Owed?

$0-$5,000 $5,000-$10,000 $10,000-$25,000 $25,000-$50,000 $50,000-$100,000 $100,000+

Submit

Δ

Even in Space, Astronauts have to File Their Taxes

Not even astronauts are far enough away to escape the IRS. Just like every other American, astronauts have to file their taxes by April 15, even if they’re in space!

How does that happen?

In an interview with CNN, Nasa astronaut Leroy Chiao explained how he managed to file his taxes from space. Chiao, commander of the tenth expedition to the International Space Station, was far from the planet on April 15, 2005. Chiao says that you have to “get someone to help you out on the ground.”

“You do have to anticipate everything,” Chiao said. Since astronauts are in orbit for long periods of time, they either have to plan everything in advance or find someone they trust on the ground.

Lucky for astronauts and Americans alike, Advocate Tax Solutions is on the ground and has trustworthy tax professionals to help with all IRS tax needs.

Regardless of how far you think you may be from the IRS, Advocate Tax Solutions is stationed and ready to help!

 

 

Budgeting to Follow Your Team

CBS’s NCAA Bowl Projection

College football fans rejoice! For the first time this year, the NCAA is determining the champion with a seeded post-season playoff for the top four teams. As the final game on January 12 approaches, fans are growing more anxious to follow their team to the championship. Even the most dedicated fans can kill their budget if they don’t plan well.

Advocate Tax Solutions wants to help all of you dedicate fans be with your team on game day! If you are planning on following your team you could end up at two games this year, which can be pricey. So here are a few money-saving tips to help your budget!

1. Look around for cheap tickets!

The National Title Game will be expensive, and you will have to buy those tickets right when they become available, but you can find less expensive tickets for the other games on Craig’s List or Stub hub.

2. Find the most affordable way to travel

If you haven’t bought plane tickets already, flying may be out of the question. Either find carpool and a car that won’t guzzle up too much gas or take the bus or the train! Bus and train tickets are very affordable even at this late of a date, and will get you there almost as fast.

3. Find deals on hotels

Look at priceline.com or lastminutetravel.com to find deep discounts on hotels in the area. Or save your pennies by booking at budget friendly hotels such as Red Roof Inn or Econolodge.

4. Tailgate!

Tailgating is already fun, but it can save you money on food and drinks! Bring everything you want from home and don’t spend money on stadium vendors!

Follow these tips and following your team should be a lot cheaper! Have fun this year, it’s going to be an incredible post-season!

 

Name(required)

Email(required)

Phone(required)

Amount Owed?(required)

$0-$10,000 $10,000-$25,000 $25,000-$50,000 $50,000-$100,000 $100,000+

Submit

Δ

6 Tips for Budgeting Last Minute Holiday Trips

If you’re going home or decided to take a last minute vacation for the holidays, you may be thinking it is too late or that it’s going to kill your budget. After all, doesn’t everyone always say that you have to book a trip far in advance or it will cost you? While it may be easier to find deals when you have more time, there are plenty of ways to save money on last minute planning.

1. Use Expedia or Travelocity to find flights

If you don’t already have frequent flier miles, find a cheaper airline like Spirit Airlines. These sites will also widen your search, and will include alternate airports in the search results. Most major cities have several airports or airports than can be reached within an hour or two hour drive.

2. Sign Up for Fare Alerts

Save time by letting travel sites notify you when fares drop. You can sign up for fare alerts on:

• Airfarewatchdog
• Yapta
• FareCompare
• TripAdvisor
• Kayak

3. Search one seat at a time.

If you are searching for more than one seat, airlines will only show the fares that are available for all travelers, even if some of the seats are available at lower prices. You can save money by splitting up your reservation.

4. Travel on Christmas Day

It’s probably not ideal but it most likely cheaper. If you didn’t book early enough, try looking on Christmas Day. There are fewer people traveling which will result in lower fares.

5. Be Willing to Be Bumped

If you have enough flexibility, be willing to be bumped. It won’t save you money right away but you could get a voucher for your next trip.

6. Look into buses and trains.

There are great alternatives for travel when flying is unaffordable. Taking the bus no longer means taking the Greyhound. Bus services like Megabus offer amazingly low prices and have Wifi and other amenities. Amtrak is also a viable option when flying is not.

With some creative planning, you can get to wherever you want to be during the holidays without paying too much. Have safe travels and a great holiday!

If you have any financial questions call your trusted advisers at 888-737-0200

or visit www.advocatetaxsolutions.com

Name(required)

Email(required)

Phone(required)

Amount Owed?

$0-$5,000 $5,000-$10,000 $10,000-$25,000 $25,000-$50,000 $50,000-$100,000 $100,000+

Comments

Submit

Δ

What Does the IRS Call Willful Neglect & What Does That Mean for You?

If you are filing your taxes this year, be careful! Remember that if the IRS even thinks there is an inkling of intentional fraud on your statements you could be facing jail time. Taxes are complex and can be confusing. You may assume that anything could be considered a simple mistake, but if the IRS deems it willful you would have the burden of proving that your mistake was unplanned.

How is a stupid mistake differentiated from an intentional mistake or willful neglect?

The IRS defines willful neglect is defined as “a conscious, intentional failure or reckless indifference to the filing requirement.” United States v. Boyle, 469 U.S. 241, n.3 (1985). Willful neglect is shown by your knowledge of your legal duty and report requirements. It means you made an intentional or voluntary choice to not comply.

But what does that mean for you?

“I didn’t know” won’t work for most mistakes. Willful blindness, avoiding learning about report requirements, can get you into IRS trouble. By law, you are responsible to learn filing requirements and to report exact truths when filing your taxes. A few mistakes may be inadvertent neglect but repeated mistakes can show deliberate disregard.

As the end of the year approaches, there is time to begin planning you tax preparations. After January 1099 and W-2 forms arrive and tax return preparations are right after. All Americans have to send tax returns and millions of Americans end up in IRS trouble because of not making estimated tax payments or improperly filing returns. We think it’s better to be safe than sorry! If you don’t want the stress of tax returns and determining what could or could not be willful neglect call our trusted advisers at Advocate Tax Solutions. It is quick, easy, and affordable for you!

Call 888-737-0200 or visit www.advocatetaxsolutions.com for a free consultation today!

 

Name(required)

Email(required)

Phone Number(required)

What is your biggest tax concern?(required)

Submit

Δ

Happy Cyber Monday! It Could Be the Last Tax Free Season for Online Sales

Happy Cyber Monday!

As the online holiday shopping frenzy begins today, we thought we’d share some advice for our e-commerce friends: ENJOY THE TAX FREE ONLINE MARKETPLACE WHILE YOU STILL CAN! While the National Sales Tax probably won’t happen this season, we bet you can expect to give away a good chunk of tax money to the government in the future.

The National Retail Federation expects that Cyber Week will see over $9 billion in total sales this year. While that’s a lot of online sales, e-commerce merchants are not celebrating. That’s because the government took notice of this industry’s huge success and Washington wants in. Currently the Marketplace Fairness Act has been passed by the Senate and residing in the House. This bill would allow states to collect taxes from residents who buy online purchases from out-of-state merchants. The buyers would be taxed at the point of purchase, and the retailers would remit the taxes to the eligible states and local municipalities.

As sales skyrocket this week, we expect the National Internet Sales Tax debate to heat up. Key lawmakers and major online retailers, such as the National Governors Association, Footlocker, and Amazon are eager to use the next few weeks of this Congress to push the long stalled bill.

Amazon, the country’s largest online retailer, is already collecting online sales tax and has made a deal with Massachusetts to collect sales taxes. This agreement only applies in the state and solely for purchase made on Amazon.

Because of companies like Amazon, we, at Advocate Tax Solutions, believe that The Marketplace Fairness Act will pass this next season, even if not in the exact form it is currently. The bill will be advertised as a way to even out the playing field for all online merchants.

Whether you are an online retailer or an avid online shopper, the impact of this bill could be huge. So get your Cyber Monday on and take advantage of this holiday’s tax free online market! We know we will.

 

Along with cyber week, tax season is coming up. Don’t forget to get your taxes in order. Call Advocate Tax Solutions at 888-737-0200 for any tax concerns and for tax preparation. Enjoy the holidays and get the tax relief you need!

Visit http://www.advocatetaxsolutions.com to learn more.

Name(required)

Amount Owed?(required)

$0-$10,000 $10,000-$25,000 $25,000-$50,000 $50,000-$100,000 $100,000+ I don't know n/a

Phone Number(required)

Email(required)

Submit

Δ