Reduce Your Taxes with the Child Care Tax Credit

If you paid someone to care for a person in your household last year while you worked or looked for work, then you may be able to take the Child and Dependent Care Tax Credit and reduce the amount of tax owed.

Here are 12 facts you should know about this important tax credit:

  1. Child, Dependent or Spouse. You may be able to claim the credit if you paid someone to care for your child, dependent or spouse last year.
  2. Work-related Expenses. Your expenses for care must be work-related. This means that you must pay for the care so you can work or look for work. This rule also applies to your spouse if you file a joint return. Your spouse meets this rule during any month they are a full-time student. They also meet it if they’re physically or mentally incapable of self-care.
  3. Qualifying Person. The care must have been for “qualifying persons.” A qualifying person can be your child under age 13. A qualifying person can also be your spouse or dependent who lived with you for more than half the year and is physically or mentally incapable of self-care.
  4. Earned Income Required. You must have earned income, such as from wages, salaries and tips. It also includes net earnings from self-employment. Your spouse must also have earned income if you file jointly. Your spouse is treated as having earned income for any month that they are a full-time student or incapable of self-care. This rule also applies to you if you file a joint return. Please call if you have any questions about what qualifies as earned income.
  5. Credit Percentage / Expense Limits.The credit is worth between 20 and 35 percent of your allowable expenses. The percentage depends on the amount of your income. Your allowable expenses are limited to $3,000 if you paid for the care of one qualifying person. The limit is $6,000 if you paid for the care of two or more.
  6. Dependent Care Benefits. If your employer gives you dependent care benefits, special rules apply. For more information about these rules, please call the office.
  7. Qualifying Person’s SSN.You must include the Social Security Number of each qualifying person to claim the credit.
  8. Keep Records and Receipts. Keep all your receipts and records for when you file your tax return next year. You will need the name, address and taxpayer identification number of the care provider. You must report this information when you claim the credit.
  9. Form 2441. File Form 2441, Child and Dependent Care Expenseswith your tax return to claim the credit.
  10. Joint Return if Married. Generally, married couples must file a joint return. You can still take the credit, however, if you are legally separated or living apart from your spouse.
  11. Don’t overlook vacation and summer camps.Day camps are common during the summer months. Many parents pay for day camps for their children during school vacations while they work or look for work. If this applies to you, your costs may qualify for a federal tax credit that can lower your taxes.
  12. Certain Care Does Not Qualify.You may not include the cost of certain types of care for the tax credit, including:

We at Schaumburg CPA offer a complete range of International Taxation, Tax and Consulting Services. We are here not only to understand your needs but excelling on solutions to satisfy your needs. We are staying on top of current law changes and developing new relationships on a daily basis to serve your needs. Manendra Kothari is qualified Chartered Accountant from India and qualified and licensed CPA from US. .

Overnight camps or summer school tutoring costs.

Care provided by your spouse or your child who is under age 19 at the end of the year.

Care given by a person you can claim as your dependent.

Contact us :-847.524.0001

Visit us :- http://schaumburgcpa.info

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CPA Firm in Hoffman Estates

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Schaumburg area CPA firm you can trust. With over 30 years of experience, we operate under on principle: to provide exceptional, personalized client service in a simple to understand method. It is our belief that we offer the best service at the most competitive price in Hoffman Estates We are a full service tax, accounting, and wealth management firm helping small to mid sized businesses and individuals with comprehensive solutions at a fixed monthly cost.

When you run a Chicago, illinois area business, keeping accurate financial records is vital to the continued success and growth of that business. Hiring a professional bookkeeper from Manen Kothari CPA Chicago & Associates who specializes in small business accounting and small business bookkeeping services can help ensure your financial data is always up to date, accurate, and securely stored.

Tax Preparation Portal Hoffman Estates

Our client portal provides the two-way transfer of information. It provides you with convenient online storage in which your files can be easily uploaded, downloaded, stored and shared in a safe and secure environment.  You have quick access to your tax returns, financial statements, payroll returns, Business liability insurance , Business owner insurance, Retirement planning, Foreign bank account reporting , 1120 preparation , 1120s preparation, Property tax appeal, 2017 tax planning, Payroll tax compliance and many other vital documents 24/7 from anywhere with an Internet connection.

We are a full service tax, accounting, and wealth management firm helping small to mid sized businesses and individuals with comprehensive solutions at a fixed monthly cost. At Schaumburgcpa & Associates, we care about each of our clients and are happy to offer free initial consultations, so call us today!

Services include:

  • Income tax return preparation
  • E-filing of returns
  • Tax planning
  • Audit representation
Book-keeping & Payroll Solutions for Small Businesses
  • Book-keeping
  • Payroll
  • Financial Statements
  • Sales & Use Tax

By hiring a qualified CPA from Manen Kothari for your small business bookkeeping needs, you can focus on what really matters – your clients. All of our CPAs are experts in small business accounting and specialize in small business bookkeeping services. From inventory expenses to keeping track of expense accounts, Manen kothari is the name you can trust for thorough, high quality small business bookkeeping services in Schaumburg.

We understand how the latest federal, state and local tax legislation and other developments affect you and are constantly identifying new ways to reduce tax liabilities.

Contact us :-  847-524-0001.

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What to Do if You Haven’t Filed a Tax Return

Filing a past due return may not be as difficult as you think.

Taxpayers should file all tax returns that are due, regardless of whether full payment can be made with the return. Depending on an individual’s circumstances, a taxpayer filing late may qualify for a payment plan. It is important, however, to know that full payment of taxes upfront saves you money.

SK Tax Associates, we provide range of extended services to our clients in various industries. We provide traditional accounting and tax related services to individual and businesses from bookkeeping, payroll processing, sales tax compliance and annual tax returns but our focus is always to go beyond compliance and help our client thrive by providing extended range of services that are rarely offered by most CPA firms.

Here’s What to Do When Your Return Is Late

Monday, April 18, 2016, was the tax deadline for most taxpayers to file their 2015 tax return. If you didn’t file a tax return or an extension to file but should have, take action now.

First, gather any and all information related to income and deductions for the tax years for which a return is required to be filed, then call the office.

If you’re owed money, then the sooner you file, the sooner you’ll get your refund. If you owe taxes, you should file and pay as soon as you can, which will stop the interest and penalties that you will owe.

If you owe money but can’t pay the IRS in full, you should pay as much as you can when you file your tax return to minimize penalties and interest.

Payment Options – Ways to Make a Payment

There are several different ways to make a payment on your taxes. Payments can be made by credit card, electronic funds transfer, check, money order, cashier’s check, or cash. If you pay your federal taxes using a major credit card or debit card, there is no IRS fee for credit or debit card payments, but the processing companies charge a convenience fee or flat fee.

Payment Options – For Those Who Can’t Pay in Full

Taxpayers unable to pay all taxes due on a tax bill are encouraged to pay as much as possible. By paying as much as possible now, the amount of interest and penalties owed will be less than if you do not pay anything at all. Based on individual circumstances, a taxpayer could qualify for an extension of time to pay, an installment agreement, a temporary delay, or an offer in compromise. Please call if you have questions about any of these options.

When it comes to paying your tax bill, it is important to review all your options; the interest rate on a loan or credit card may be lower than the combination of penalties and interest imposed by the Internal Revenue Code. You should pay as much as possible before entering into an installment agreement.

For individuals, IRS Direct Pay is a fast and free way to pay directly from your checking or savings account. Taxpayers who need more time to pay can set up either a short-term payment extension or a monthly payment plan. Most people can set up a payment plan using the Online Payment Agreement tool on IRS.gov.

  • A short-term extension gives a taxpayer an additional 60 to 120 days to pay. No fee is charged, but the late-payment penalty plus interest will apply. Generally, taxpayers will pay less in penalties and interest than if the debt were repaid through an installment agreement over a greater period of time.
  • A monthly payment plan or installment agreement gives a taxpayer more time to pay. However, penalties and interest will continue to be charged on the unpaid portion of the debt throughout the duration of the installment agreement/payment plan.

Taxpayers who owe $25,000 or less in combined tax, penalties and interest can apply for and receive immediate notification of approval through an IRS web-based application. Balances over $25,000 require taxpayers to complete a financial statement to determine the monthly payment amount for an installment plan.

A user fee will also be charged if the installment agreement is approved. The fee, normally $120, is reduced to $52 if taxpayers agree to make their monthly payments electronically through electronic funds withdrawal. The fee is $43 for eligible low-and-moderate-income taxpayers.

  • Starting in 2016, individual taxpayers who do not have a bank account or credit card and need to pay their tax bill using cash, are now able to make a payment at one or more than 7,000 7-Eleven stores nationwide. Individuals wishing to take advantage of this payment option should visit the IRS.gov payments page, select the cash option in the other ways you can pay section and follow the instructions.

Penalties for Filing a Late Tax Return

If you are due a refund there is no penalty if you file a late tax return. If you owe tax, and you failed to file and pay on time, you will most likely owe interest and penalties on the tax you pay late. Here are some facts that you should know about penalties for filing a late return:

Two penalties may apply. One penalty is for filing late and one is for paying late. They can add up fast. Interest accrues on top of the penalties.

Penalty for late filing. If you file your 2015 tax return more than 60 days after the due date or extended due date, the minimum penalty is $205 or, if you owe less than $205, 100 percent of the unpaid tax. Otherwise, the penalty can be as much as five percent of your unpaid taxes each month up to a maximum of 25 percent.

Penalty for late payment. The penalty is generally 0.5 percent of your unpaid taxes per month. It can build up to as much as 25 percent of your unpaid taxes.

Combined penalty per month. If both the late filing and late payment penalties apply, the maximum amount charged for the two penalties is 5 percent per month.

Late payment penalty may not apply. If you requested an extension of time to file your income tax return by the tax due date and paid at least 90 percent of the taxes you owe, you may not face a failure-to-pay penalty. However, you must pay the remaining balance by the extended due date. You will owe interest on any taxes you pay after the April 18 due date.

File even if you can’t pay. Filing on time and paying as much as you can keeps your interest and penalties to a minimum. If you can’t pay in full, getting a loan or paying by debit or credit card may be less expensive than owing the IRS. If you do owe the IRS, the sooner you pay your bill the less you will owe.

What Happens If You Don’t File a Past Due Return or Contact the IRS?

It’s important to understand the ramifications of not filing a past due return and the steps that the IRS will take. Taxpayers who continue to not file a required return and fail to respond to IRS requests for a return may be considered for a variety of enforcement actions.

Don’t Wait!

If you haven’t filed a tax return yet, call the office today to schedule an appointment as soon as possible.

http://schaumburgcpa.info/cpa-in-chicago.html is an official blog of Manen Kothari CPA. To ensure compliance with the requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein. One should consult their tax advisor before any of the information contained herewith applied to their individual tax situations.

Contact US :-847-524-0001

Visit us :- http://schaumburgcpa.info

Ensuring Financial Success for Your Business

Can you point your company in the direction of financial success, step on the gas, and then sit back and wait to arrive at your destination?

Not quite. You can’t let your business run on autopilot and expect good results. Any business owner knows you need to make numerous adjustments along the way – decisions about pricing, hiring, investments, and so on.

So, how do you handle the array of questions facing you?

One way is through cost accounting.

Cost Accounting Helps You Make Informed Decisions

Cost accounting reports and determines the various costs associated with running your business. With cost accounting, you track the cost of all your business functions – raw materials, labor, inventory, and overhead, among others.

Note: Cost accounting differs from financial accounting because it’s only used internally, for decision making. Because financial accounting is employed to produce financial planner for external stakeholders, such as stockholders and the media, it must comply with generally accepted accounting principles (GAAP). Cost accounting does not.

Cost accounting allows you to understand the following:

  1. Cost behavior. For example, will the costs increase or stay the same if production of your product goes up?
  2. Appropriate prices for your goods or services. Once you understand cost behavior, you can tweak your pricing based on the current market.
  3. Budgeting. You can’t create an effective budget if you don’t know the real costs of the line items.

Is It Hard?

To monitor your company’s costs with this method, you need to pay attention to the two types of costs in any business: fixed and variable.

Fixed costs don’t fluctuate with changes in production or sales. They include:

  • rent
  • insurance
  • dues and subscriptions
  • equipment leases
  • payments on loans
  • management salaries
  • advertising

Variable costs DO change with variations in production and sales. Variable costs include:

  • raw materials
  • hourly wages and commissions
  • utilities
  • inventory
  • office supplies
  • packaging, mailing, and shipping costs

Tip: Cost accounting is easier for smaller, less complicated businesses. The more complex your business model, the harder it becomes to assign proper values to all the facets of your company’s functioning.

If you’d like to understand the ins and outs of your business better and create sound guidance for internal decision making, consider setting up a cost accounting system.

Need Help?

Please call if you need assistance setting up cost accounting and inventory systems, preparing budgets, cash flow management or any other matter related to ensuring the financial success of your business.

Www.SchaumburgCPA.Info is an official blog of Manen Kothari CPA. To ensure compliance with the requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein. One should consult their tax advisor before any of the information contained herewith applied to their individual tax situations. SK Tax Associates, Schaumburgcpa.info, or Manen Kothari cannot be held responsible for any general information stated above.

Contact us now:  847.524.0001

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