Debra A. Simmons, CPA

Archive for the ‘Income Taxes’ Category

Tax Tips for Individuals Selling Their Home

In Income Taxes on August 8, 2011 at 8:38 pm

Here is some important information for individuals who have sold or are about to sell their home. If you have a gain from the sale of your main home, you may qualify to exclude all or part of that gain from your income. Here are tips to keep in mind when selling your home.

*In general, you are eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale.

*If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases). Read the rest of this entry »

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Tax Tips for Job Seekers

In Income Taxes on July 29, 2011 at 4:35 pm

Many taxpayers spend time during the summer months updating their résumé and attending career fairs. Job seekers may be able to deduct some of the expenses on their tax return.

Here are things you to know about deducting costs related to your job search.

*To qualify for a deduction, the expenses must be spent on a job search in your current occupation. You may not deduct expenses you incur while looking for a job in a new occupation.

*You can deduct employment and outplacement agency fees you pay while looking for a job in your present occupation. If your employer pays you back in a later year for employment agency fees, you must include the amount you receive in your gross income, up to the amount of your tax benefit in the earlier year. Read the rest of this entry »

Summer Day Camp Expenses May Qualify for a Tax Credit

In Income Taxes on July 7, 2011 at 6:09 pm

Along with the lazy, hazy days of summer come some extra expenses, including summer day camp. But, there is some good news for parents: those added expenses may help you qualify for a tax credit.

Many parents who work or are looking for work must arrange for care of their children under 13 years of age during the school vacation.

Here are some facts you should know about a tax credit available for child care expenses. The Child and Dependent Care Credit is available for expenses incurred during the summer and throughout the rest of the year. Read the rest of this entry »

IRS Increases Mileage Rate to 55.5 Cents per Mile

In Income Taxes on June 23, 2011 at 5:24 pm

The Internal Revenue Service announced an increase in the optional standard mileage rates for the final six months of 2011. In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2011. The IRS normally updates the mileage rates once a year in the fall for the next calendar year. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business and other purposes.

The rate will increase to 55.5 cents a mile for all business miles driven from July 1, 2011, through Dec. 31, 2011. This is an increase of 4.5 cents from the 51 cent rate in effect for the first six months of 2011, as set forth in Revenue Procedure 2010-51. The new six-month rate for computing deductible medical or moving expenses will also increase by 4.5 cents to 23.5 cents a mile, up from 19 cents for the first six months of 2011. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.

The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage. Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Tips for Managing Your Tax Records

In Income Taxes on April 24, 2011 at 6:21 pm

After you file your taxes, you will have many records that may help document items on your tax return. You will need these documents should the IRS select your return for examination. Here are some tips about keeping good records.

*Normally, tax records should be kept for three years.

*Some documents — such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property — should be kept longer.

*In most cases, the IRS does not require you to keep records in any special manner. Generally speaking, however, you should keep any and all documents that may have an impact on your federal tax return.

*Records you should keep include bills, credit card and other receipts, invoices, mileage logs, canceled, imaged or substitute checks, proofs of payment, and any other records to support deductions or credits you claim on your return.

For more information on what kinds of records to keep, feel free to contact Debbie at (310)701-1825.

Facts About Bartering

In Income Taxes on April 20, 2011 at 6:23 pm

In today’s economy, small business owners sometimes look to the oldest form of commerce – the exchange of goods and services, or bartering. Bartering is the trading of one product or service for another. Usually there is no exchange of cash. However, the fair market value of the goods and services exchanged must be reported as income by both parties.

Here are facts about bartering small business owners should be aware of:

*Barter Exchange A barter exchange functions primarily as the organizer of a marketplace where members buy and sell products and services among themselves. Whether this activity operates out of a physical office or is internet based, a barter exchange is generally required to issue Form 1099-B, Proceeds from Broker and Barter Exchange Transactions, annually to their clients or members and to the IRS. Read the rest of this entry »

Tips to Help you Determine if your Gift is Taxable

In Income Taxes on April 17, 2011 at 6:14 pm

If you give someone money or property during your life, you may be subject to the federal gift tax. Most gifts are not subject to the gift tax, but the following tips to help you determine if your gift is taxable.

1. Most gifts are not subject to the gift tax. For example, there is usually no tax if you make a gift to your spouse or to a charity. If you make a gift to someone else, the gift tax usually does not apply until the value of the gifts you give that person exceeds the annual exclusion for the year. For 2010, the annual exclusion is $13,000. Read the rest of this entry »

Tips About Rental Income and Expenses

In Income Taxes on March 20, 2011 at 3:00 pm

You generally must include in your gross income all amounts you receive as rent. Rental income is any payment you receive for the use of or occupation of property. Expenses of renting property can be deducted from your gross rental income. You generally deduct your rental expenses in the year you pay them.

You generally must report rental income on your tax return in the year that you actually receive it: Read the rest of this entry »

Employee Business Expenses

In Income Taxes on March 18, 2011 at 2:41 pm

If you itemize deductions and are an employee, you may be able to deduct certain work-related expenses. Expenses that may qualify for an itemized deduction include:

*Business travel away from home
*Business use of car
*Business meals and entertainment
*Travel
*Use of your home
*Education
*Supplies
*Tools
*Miscellaneous expenses Read the rest of this entry »

Essential Facts about Claiming the First-Time Homebuyer Credit

In Income Taxes on February 9, 2011 at 10:36 pm

If you purchased a home in 2010, you may be eligible to claim the First-Time Homebuyer Credit, whether you are a first-time homebuyer or a long-time resident purchasing a new home. The purchaser must have been at least 18 years old on the date of purchase; for a married couple, only one spouse must meet this age requirement. A dependent is not eligible to claim the credit.

Here are eight things you should know about claiming the credit:

1. You must have bought – or entered into a binding contract to buy – a principal residence located in the United States on or before April 30, 2010. If you entered into a binding contract by April 30, 2010, you must have closed on the home on or before September 30, 2010.
2. To be considered a first-time homebuyer, you and your spouse – if you are married – must not have jointly or separately owned another principal residence during the three years prior to the date of purchase. Read the rest of this entry »