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These articles discuss topics that apply to the average taxpayer.  You will find information about refunds, the child credit, the AMT and much more.  If you have a tax-related issue that is not covered in this section, please call this office for more information.

If you are unable to pay your tax liability, there are some things you need to know. Most importantly, don't let your inability to pay your tax liability in full keep you from filing your tax return properly and on time.  Why?  Because there is a “failure to file” penalty that accrues at the rate of 5% per month or part of a month (to a maximum of 25%) on the amount of tax your return shows that you owe.  The tax ramifications, penalties and possible solutions are included in the article.Exte...

AGI is the acronym for Adjusted Gross Income. It is generally the sum of a taxpayer's gross income less adjustments that are permitted by law (but before deductions and exemptions). Those who file Form 1040 can find their AGI at the bottom of page 1 of the tax return. Many tax benefits and allowances, such as credits, deductions, exemptions, etc., are limited by a taxpayer's AGI. There is also the term MAGI which is the acronym for Modified Adjusted Gross Income. Although MAGI may have a diff...

The IRS estimates that approximately 70 million Americans annually receive tax refunds averaging around $1,800.  If you are among those who received a refund, you are probably celebrating. While some consider a large refund cause for celebration, it's actually a financial mistake that becomes particularly costly for those who get refunds year after year.What's wrong with a refund you ask? Well, it means you've overpaid your tax all year. That's actually your own money you are getting back and...

The Child Credit was first introduced in 1998, when taxpayers were allowed to claim a $400 tax credit for their qualified children who were under the age of 17 at the end of the tax year. Per prior tax law changes, the child credit has increased to $1,000, and the $1,000 credit was made permanent by the American Taxpayer Relief Act of 2012. A qualifying child for purposes of the child tax credit is a child who: Is the taxpayer’s son, daughter, stepchild, foster child, brother, sister, stepb...

Originally conceived to combat taxpayers in the higher-income brackets who utilized legal tax shelters and tax preferences to avoid paying income tax, the AMT can be tricky and hit you when least expected. The tax was supposed to inflict a “minimum” tax on those who were able to avoid the regular tax. However, years of inflation have pushed many middle-income taxpayers into the reach of the AMT. Although there is a long list of items that can trigger the AMT, for most individuals, the trigger...

According to a recent news article in a large metropolitan newspaper, the IRS may be auditing fewer returns but they are getting smarter about choosing those they do audit. Their goal, of course, is to focus scrutiny on the most "audit worthy" returns - those with potential for big adjustments. As taxpayers, all of us would like to avoid an audit. But how does one avoid being "chosen"? While there's no sure way, experts do offer advice on what to look for to help cut audit risk.Are deductible...

Ever wonder what the term “tax bracket” means? It refers to the top marginal tax rate that individuals are being taxed, not the average. Knowing your marginal rate is important, because any increase or decrease in your taxable income will affect your tax at your top marginal rate. Thus, if you are in the 25% marginal bracket and plan on signing up for your employer’s 401(k) plan, you will generally save $250 ($1,000 x .25) in federal taxes for each $1,000 contributed to the 401(k) plan. The r...

Taxpayers often question how long records must be kept and the amount of time IRS has to audit a return after it is filed.It all depends on the circumstances! In many cases, the federal statute of limitations can be used to help you determine how long to keep records. With certain exceptions, the statute for assessing additional tax is 3 years from the return due date or the date the return was filed, whichever is later. However, the statute of limitations for many states is one year longer t...

The only interest that is still deductible as an itemized deduction is home mortgage interest and investment interest. If you are like so many others with large consumer debt such as credit cards, car payments etc. you are paying interest that is not deductible. If the amount of consumer interest you pay each year is substantial and you itemize your deductions, you may want to consider converting that non-deductible interest into deductible interest by paying off the consumer debt with a home...

Congress considers our tax system as a "pay-as-you-go" system. To facilitate that concept, the government has provided several means of assisting taxpayers in meeting the "pay-as-you-go" requirement. These include:  Payroll withholding for employees;  Pension withholding for retirees; and  Estimated tax payments for self-employed individuals and those with other sources of income not covered by withholding. When a taxpayer fails to prepay a safe harbor (minimum) amount, they can be su...

Our "pay-as-you-go" tax system requires that you make payments of your tax liability evenly throughout the year. If you don't, it's possible you could owe an underpayment penalty. Some taxpayers meet the "pay-as-you-go" requirements by making quarterly estimated payments. However, when your income is primarily from wages, you meet the requirements through wage withholding and you rely on your employer's payroll department to take out the right amount of tax. Unfortunately, what payroll withho...