If you think tax planning only happens in the spring, think again. Taxes are a year-round concern and there’s no better time than the present to plan for the future. Consider the following:
Fall means the end of summer and summer camp for many kids. Did you know there’s a tax credit for that? If your child attended a summer day camp (not summer school or an overnight camp) the cost of that camp may qualify for the Child and Dependent Care Credit. While this is often referred to as the “day care credit,” some summer camps also qualify. Keep good records.
Fall also means college, and you may be eligible for tax credits. The American Opportunity Tax Credit (AOTC), which has been extended through December 2017, is a great way to offset the costs of higher education. To qualify for the AOTC, you must meet all three of the following criteria:
The eligible student is yourself, your spouse or a dependent you list on your tax return.
The AOTC can offset 100% of the first $2,000 and 25% of the second $2,000 of qualified education expenses paid. There is a phaseout for higher income taxpayers and a refundable portion for lower income taxpayers so each situation is unique.
Pay special attention to #3 as this is a conversation to have with your children before you send them off to school. If a student claims himself as a dependent, he claims the education credit as well. However, students often qualify as dependents on their parents’ return and the parents often recognize a greater tax benefit when claiming the credit. Make sure your student knows to talk to you before asserting his independence and filing his own return.
In addition to the AOTC, higher education costs can be offset by the Lifetime Learning Credit, the Tuition and Fees Deduction and the Student Loan Interest Deduction. While education tax benefits are plentiful, they are also complicated. For more information, refer to IRS Publication 970 or give me a call.
Fall also means a third estimated tax payment is due on September 15. If you are clergy with no withholdings or self-employed, you may be required to make estimated tax payments. Don’t miss this important deadline.
Fall is the perfect time to do some planning to minimize your tax bill for 2016. Did you move in 2016? Has your income changed since you filed your last return? Have you started school or started a business? Married or divorced? Retired? Had a baby? Purchased a house? Incurred serious medical expenses? Changed your health insurance? These and many other life experiences can affect your tax return so planning for those events now can save you money later.
Remember, Enrolled agents are America’s Tax Experts® and we pay attention to all this stuff so you don’t have to.
https://clergytaxpro.net/taxes/wp-content/uploads/2016/12/logo-dark-300x83.png00Susanhttps://clergytaxpro.net/taxes/wp-content/uploads/2016/12/logo-dark-300x83.pngSusan2016-09-06 15:27:022017-02-06 15:07:56FALL 2016 - Fall means . . .