So you filed your tax return... What's next?

For many business owners filing their taxes in Prescott it becomes a last minute chore. The relief that comes on April 16 after another tax season is over can't come fast enough. One thing you can learn from a difficult tax-preparation experience is, if you plan for next year, you can get your finances in order faster and have better results.

Edge Tax and Accounting shares with you these tax planning tips:

1. Get Your Withholding Figured Out

 It is almost impossible to have exactly the right amount of money taken out of your check to cover your taxes. Either you will owe small amounts or get a refund back from the Internal Revenue Service.

In some cases having far too little tax money taken out can lead to costly penalties. on the other hand a big refund might seem nice, but in reality, it's just an interest-free loan that you give to the IRS with money you could have collected throughout the year.

It is your money and we can help you figure it out!

2. Set the Stage for Claiming Valuable Tax Breaks

When preparing last years taxes, you likely noticed there are many tax deductions and credits that you might be able to use to reduce your tax bill. These are a great place to start.

Plan out next year by having everything in one place, don't scurry around to put together the necessary supporting documents next time!

3. Get Smarter About Your Investments

Check with your financial planner or accountant each time you make a change to your investments. Tax rules change from year to year, and each change can have dramatic impacts on your taxes.

Simply selling a stock and making a profit can produce a bigger tax bill than you'd expected. We suggest using strategies to keep the tax impact of your investments as small as possible. Individual retirement accounts, 401(k)s, and other tax-favored accounts are available to help you save for retirement, while 529 plans for college savings and health savings accounts for medical expenses fulfill similar functions for other financial needs.

The sooner you look into the options, the more you'll save at tax time every year. Obviously any time before the end of the year is a good time to check your tax liability, however following these steps shortly after filing will insure you get the most out of these tips...
Still need help with your taxes or tax preparation in Prescott, contact the experts at Edge Tax and Accounting... Solving problems you didn't know you had!

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Medicare and the Affordable Care Act

Taxing Issues

There are so many questions that come up when you start talking about Medicare. However most intricacies are out of the scope of this article from a tax professional. Here are some basics to keep in mind.

With so many options available to seniors today it’s important to choose an insurance plan that not only fits your needs but also won’t cost you on your Obamacare tax penalties.

According to the Affordable Care Act, though Medicare, Medicaid, and Medigap all part of the government health system, Medigap does not qualify as an option by itself!

Here are some basics:

Medicare Parts A and B are funded and run by the government while Parts C and D are government-regulated but run by private companies.

While Medicaid is backed by the government, each state runs its own package with different rules and regulations.

Ready for the twist?

Medigap supplements the government plans by filling in the gaps in coverage and is purchased through private insurance companies. There is a guaranteed right to buy this type of policy, but only within six months of enrolling in Part B.

The caveat that unless you don’t buy within that time, insurance companies might refuse to offer coverage because of your health history, can be invoked.

This even get more confusing if you do not qualify for Medicaid!

Under The Affordable Care Act, or Obamacare, the plan was to close the “donut hole” regarding Part D drug coverage, wherein seniors had to begin to pay out of pocket for prescriptions when benefit limits were exceeded.

For those who do qualify:

Medicare isn’t part of Obamacare’s Health Insurance Marketplace, and no one has to replace their Medicare coverage with Marketplace-based health insurance. No matter how you get Medicare, whether through Original Medicare or a Medicare Advantage Plan, you’ll still have the same benefits and security you have now.

If you still have questions about your medical benefits requirements under Obamacare and taxes, contact Edge Tax and Accounting, if we cannot answer your questions we will point you in the right direction!

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Check Out College Tax Credits for This Year and More

With another school year started, Edge Tax Accounting in Prescott is reminding parents and students that now is a good time to see if they will qualify for college tax credits or other education-related tax benefits. Spending a few minutes now could save you when filing your federal income tax return.

The tax credits apply to eligible students and are subject to income limits that could reduce the amount claimed on their tax return. Many of those eligible for the American Opportunity Tax Credit qualify for the maximum annual credit of $2,500 per student. We can help you determine eligibility for these benefits when preparing your taxes.

Here are some more key features of the tax credit:

• Qualified education expenses are amounts paid for tuition, fees and other related expenses for an eligible student. Other expenses, such as room and board, are not qualified expenses.
• The credit equals 100 percent of the first $2,000 spent and 25 percent of the next $2,000. Forty percent of the American Opportunity Tax Credit is refundable.
• The full credit can only be claimed by taxpayers whose modified adjusted gross income (MAGI) is $80,000 or less. For married couples filing a joint return, the limit is $160,000.

Though the half-time student requirement does not apply to the lifetime learning credit, the course of study must be either part of a post-secondary degree program or taken by the student to maintain or improve job skills. Other features of the credit include:

• Tuition and fees required for enrollment or attendance qualify as do other fees required for the course. Additional expenses do not.
• The credit equals 20 percent of the amount spent on eligible expenses across all students on the return.
• Full credit can be claimed by taxpayers whose MAGI is $55,000 or less. For married couples filing a joint return, the limit is $110,000. The credit is phased out for taxpayers with incomes above these levels.

There are a variety of other education-related tax benefits that can help many taxpayers. They include:

• Scholarship and fellowship grants — generally tax-free if used to pay for tuition, required enrollment fees, books and other course materials, but taxable if used for room, board, research, travel or other expenses.
• Student loan interest deduction of up to $2,500 per year.
• Savings bonds used to pay for college — though income limits apply, interest is usually tax-free if bonds were purchased after 1989 by a taxpayer who, at time of purchase, was at least 24 years old.
• Qualified tuition programs, also called 529 plans, used by many families to prepay or save for a child’s college education.

Taxpayers with qualifying children who are students up to age 24 may be able to claim a dependent exemption and the Earned Income Tax Credit. Contact Edge for all your accounting and tax needs!

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IRS Warns Taxpayers to Guard Against New Tricks by Scam Artists

Following the emergence of new variations of widespread tax scams, the Internal Revenue Service today issued another warning to taxpayers to remain on high alert and protect themselves against the ever-evolving array of deceitful tactics scammers use to trick people.

These schemes — which can occur over the phone, in e-mails or through letters with authentic looking letterhead — try to trick taxpayers into providing personal financial information or scare people into making a false tax payment that ends up with the criminal.

If you have any questions about tax documents or specific letters you have received, contact Edge Tax Accounting in Prescott today! We will have a look and let you know what your dealing with.

The Treasury Inspector General for Tax Administration (TIGTA) has received reports of roughly 600,000 contacts since October 2013. TIGTA is also aware of nearly 4,000 victims who have collectively reported over $20 million in financial losses as a result of tax scams.

“We continue to see these aggressive tax scams across the country,” IRS Commissioner John Koskinen said. “Scam artists specialize in being deceptive and fooling people. The IRS urges taxpayers to be extra cautious and think twice before answering suspicious phone calls, emails or letters.”

Scammers posing as IRS agents first targeted those they viewed as most vulnerable, such as older Americans, newly arrived immigrants and those whose first language is not English. These criminals have expanded their net and are now targeting virtually anyone.

In a new variation, scammers alter what appears on your telephone caller ID to make it seem like they are with the IRS or another agency such as the Department of Motor Vehicles. They use fake names, titles and badge numbers. They use online resources to get your name, address and other details about your life to make the call sound official. They even go as far as copying official IRS letterhead for use in email or regular mail.

Brazen scammers will even provide their victims with directions to the nearest bank or business where the victim can obtain a means of payment such as a debit card. And in another new variation of these scams, con artists may then provide an actual IRS address where the victim can mail a receipt for the payment — all in an attempt to make the scheme look official.

The most common theme with these tricks seems to be fear. Scammers try to scare people into reacting immediately without taking a moment to think through what is actually happening.

These scam artists often angrily threaten police arrest, deportation, license revocation or other similarly unpleasant things. They may also leave “urgent” callback requests, sometimes through “robo-calls,” via phone or email. The emails will often contain a fake IRS document with a telephone number or email address for your reply.

It is important to remember the official IRS website is IRS.gov. Taxpayers are urged not to be confused or misled by sites claiming to be the IRS but ending in .com, .net, .org or other designations instead of .gov. Taxpayers should never provide personal information, financial or otherwise, to suspicious websites or strangers calling out of the blue.

Below are five things scammers often do that the real IRS would never do.

The IRS will never:

• Angrily demand immediate payment over the phone, nor will the agency call about taxes owed without first having mailed you a bill.
• Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.
• Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
• Require you to use a specific payment method for your taxes, such as a prepaid debit card.
• Ask for credit or debit card numbers over the phone.

Here’s what you should do if you think you’re the target of an IRS impersonation scam:

• If you actually do owe taxes, call the IRS at 1-800-829-1040. IRS workers can help you with a payment issue.
• If you know you don’t owe taxes or do not immediately believe that you do, you can report the incident to the Treasury Inspector General for Tax Administration (TIGTA) at 1-800-366-4484. 
• If you’ve been targeted by any scam, be sure to contact the Federal Trade Commission and use their “FTC Complaint Assistant” at FTC.gov. Please add “IRS Telephone Scam” to the comments of your complaint.

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Job Search Expenses May be Deductible

Some Americans find themselves pounding the pavement in quest of a new job, whether they've gotten the pink slip or expect to get one soon. The good news: The search may help you cut your tax bill because under certain circumstances, job-hunting expenses are tax deductible.

New job, same field

First, your hunt for new work must be in the same field in which you're currently or were formerly employed. Uncle Sam won't help out if you decide to totally switch career gears.

Second, you can't decide to chill out for a while and then expect the IRS to help when you decide it's time to get back on the career track. Deductions aren't allowed for employment-search costs when there is a "substantial break" between your last job and when you begin looking for a new one.
Finally, recent graduates are out of luck. The costs you incur in getting your first job aren't deductible, because the tax law only allows you to write off expenses incurred in searching for another position in your present occupation.
But if you're on the lookout for a new position, start saving those job-search receipts.

What you can write off

• Same Occupation.  Your expenses must be for a job search in your current line of work. You can’t deduct expenses for a job search in a new occupation.
• Résumé Costs.  You can deduct the cost of preparing and mailing your résumé.
• Travel Expenses.  If you travel to look for a new job, you may be able to deduct the cost of the trip. To deduct the cost of the travel to and from the area, the trip must be mainly to look for a new job. You may still be able to deduct some costs if looking for a job is not the main purpose of the trip.
• Placement Agency. You can deduct some job placement agency fees you pay to look for a job.
• First Job.  You can’t deduct job search expenses if you’re looking for a job for the first time.
• Substantial Job Break.  You can’t deduct job search expenses if there was a long break between the end of your last job and the time you began looking for a new one.
• Reimbursed Costs.  Reimbursed expenses are not deductible.
• Schedule A.  You usually deduct your job search expenses on Schedule A, Itemized Deductions. You’ll claim them as a miscellaneous deduction. You can deduct the total miscellaneous deductions that are more than two percent of your adjusted gross income.
• Premium Tax Credit.  If you receive advance payments of the premium tax credit it is important that you report changes in circumstances, such as changes in your income or eligibility for other coverage, to your Health Insurance.
• Marketplace. Other changes that you should report include changes in your family size or address.  Advance payments of the premium tax credit provide financial assistance to help you pay for the insurance you buy through the Health Insurance Marketplace. Reporting changes will help you get the proper type and amount of financial assistance so you can avoid getting too much or too little in advance.

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