by steve | Feb 23, 2012 | Income Tax Preparation, IRS Tax Advice
Questions about Capital Gains come up every year at tax time.
Here are the top tax tips regarding Capital Gains for 2011.
This presentation is to aid and assist all our clients of Fresh Start Tax LLC.
Capital Gains and Losses from Tax Experts:
Capital Assets
Capital assets include a home, household furnishings and stocks and bonds held in a personal account. When you sell a capital asset, the difference between the amount you paid for the asset and its sales price is a capital gain or capital loss.It is the net equity or profit IRS is concerned about.
Facts from the IRS about how gains and losses can affect your Federal Income Tax Return or 1040.
1. Almost everything you own and use for personal purposes, pleasure or investment is a capital asset. Bet you did not know that!
2. When you sell a capital asset, the difference between the amount you sell it for and your basis is usually what you paid for it. That is called a capital gain or a capital loss for income tax purposes.
3. You the taxpayer must report all capital gains.
4. You may only deduct capital losses on investment property, not on personal-use property.
5. Capital gains and losses are classified as long-term or short-term. If you hold the property more than one year, your capital gain or loss is long-term. If you hold it one year or less, the gain or loss is short-term.
6. If you have long-term gains in excess of your long-term losses, the difference is normally a net capital gain. Subtract any short-term losses from the net capital gain to calculate the net capital gain you must report.
7. The tax rates that apply to net capital gain are generally lower than the tax rates that apply to other income. For 2011, the maximum capital gains rate for most taxpayers is 15 percent.
For lower-income individuals, the rate may be 0 percent on some or all of the net capital gain. Rates of 25 or 28 percent may apply to special types of net capital gain.
8. If your capital losses exceed your capital gains, you can deduct the excess on your tax return to reduce other income, such as wages, up to an annual limit of $3,000, or $1,500 if you are married filing separately.
9. If your total net capital loss is more than the yearly limit on capital loss deductions, you can carry over the unused part to the next year and treat it as if you incurred it in that next year. A Break!
10. This year 2012, a new form, Form 8949, Sales and Other Dispositions of Capital Assets, will be used to calculate capital gains and losses.
You should use IRS Form 8949 to list all capital gain and loss transactions. The subtotals from this form will then be carried over to Schedule D (Form 1040), where gain or loss will be calculated.
Should you have any question or need professional tax representation call us today.
by steve | Feb 16, 2012 | Income Tax Preparation, Tax Help
Tips on Unemployment Benefits from Former IRS Agents. Call us should you have further questions.
Taxable or Non-Taxable, find out up front from the payer.
Unemployment compensation.
Generally unemployment compensation includes among other forms, state unemployment compensation benefits, but the tax implications depend on the type of program paying the benefits. you should check and find out whether the benefit is taxable from the start so you do not have a tax problem at a later time.
You must report unemployment compensation on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ.
Here are some great tips from the IRS about Unemployment Benefits.
1. You must include all unemployment compensation you receive in your total income for the year. You should receive a Form 1099-G, with the total unemployment compensation paid to you shown in box 1.
2. Other types of unemployment benefits include:
a. Benefits paid by a state or the District of Columbia from the Federal Unemployment Trust Fund
b. Railroad unemployment compensation benefits
c. Disability payments from a government program paid as a substitute for unemployment compensation
d. Trade readjustment allowances under the Trade Act of 1974
e. Unemployment assistance under the Disaster Relief and Emergency Assistance Act
f. For complete information on each of the benefits listed, see chapter 12 in IRS Publication 17, Your Federal Income Tax, or Publication 525, Taxable and Nontaxable Income.
3. You must report the unemployment compensation benefits paid to you as an unemployed member of a union from regular union dues.
However, if you contribute to a special union fund and your payments to the fund are not deductible, you only need to include in your income the unemployment benefits that exceed the amount of your contributions.
4. You may choose to have federal income tax withheld from your unemployment compensation. We would highly recommend this.
To make this choice, complete Form W-4V, Voluntary Withholding Request, and give it to the paying office. Taxes will be withheld at 10 percent of your payment. If you choose not to have tax withheld, you may have to make estimated tax payments throughout the year.
5. Should need you need a professional tax preparer call us today, we can audit proof your tax return.
by steve | Feb 16, 2012 | Income Tax Preparation, Tax News
Medical and Dental Expenses allowed by the Internal Revenue Service that qualify for tax deductions. Make sure you keep your receipts!
This list includes both Medical and Dental.
If you or your spouse or dependents had significant medical or dental costs in 2011, you may be able to deduct those expenses when you file your tax return
What you should know about the TAX LAW:
1. You must itemize to qualify for medical and dental expenses. This is done on a Form 1040, Schedule A.
2. The deduction is limited.
You can deduct total medical care expenses that exceed 7.5 percent of your adjusted gross income for the year. You figure this on Form 1040, Schedule A. on your tax return.
3. Expenses must have been paid in 2011.
You can include the medical and dental expenses you paid during the year, regardless of when the services were provided. You will need to have good receipts or records to substantiate your expenses if your tax return is audited by the IRS.
4. You cannot deduct reimbursed expenses.
Your total medical expenses for the year must be reduced by any reimbursement. Normally, it makes no difference if you receive the reimbursement or if it is paid directly to the doctor or hospital. You receive the money back no deduction, it is that simple.
5. Whose expenses may qualify.
You may include qualified medical expenses you pay for yourself, your spouse and your dependents. Some exceptions and special rules apply to divorced or separated parents, taxpayers with a multiple support agreement or those with a qualifying relative who is not your child.
6. Types of expenses that qualify for the medical or dental deductions.
You can deduct expenses primarily paid for the diagnosis, cure, mitigation, treatment or prevention of disease, or treatment affecting any structure or function of the body. For drugs, you can only deduct prescription medication and insulin.
You can also include premiums for medical, dental and some long-term care insurance in your expenses. Starting in 2011, you can also include lactation supplies.
7. Transportation costs may qualify for a tax deduction.
You may deduct transportation costs primarily for and essential to medical care that qualify as medical expenses. You can also deduct the actual fare for a taxi, bus, train, plane or ambulance as well as tolls and parking fees.
If you use your car or other vehicle for medical transportation, you can deduct actuall out-of-pocket expenses such as gas and oil, or you can deduct the standard mileage rate for medical expenses, which is 19 cents per mile for 2011.
8. Tax-favored saving for medical expenses Distributions from Health Savings Accounts and withdrawals from Flexible Spending Arrangements may be tax free if used to pay qualified medical expenses including prescription medication and insulin.
9. Should you have any questions call us today and get the answers from Former IRS Agents.
by steve | Jan 10, 2012 | Income Tax Preparation
With so much tax fraud around and thieves trying to pick up easy money, hundreds of these scam artists prey on taxpayers seeking large refunds. These thieves will promise you the moon and tell you anything to get there hands on your refund check.
Jail cells are lined up with these thieves.
Stop and think, do you homework before choosing a income tax preparer. It will save you money, give you piece of mind and never lose sleep.
How to Choose a Tax Preparer
Many people look for help from professionals when it’s time to file their tax return. If you use a paid tax preparer to file your return this year, the IRS urges you to choose that preparer wisely. Even if a return is prepared by someone else, the taxpayer is legally responsible for what’s on it. So, it’s very important to choose your tax preparer carefully.
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by steve | Dec 29, 2010 | Income Tax Preparation, IRS Tax Advice, Tax Returns
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