A. Offer more tax incentives for certain groups.

B. Tax the more economically challenged taxpayers. 

C. Make tax changes immediately in tax season. 

Tax changes are usually made public towards the end of the year. At least that is what it seems like. The reason is that we as taxpayers and also as tax preparers focused most of our attention to tax matters towards the end of the year and during the start of the year, when tax season begins. Many interested individuals and groups work really hard to convince the ones in the decision making process to pass new tax laws and as a result to convince them to offer more tax incentives for certain groups or for more economically challenged taxpayers. Some of these tax changes can take effect immediately and the decision to pass the new tax change can even happen right away in tax season and apply for the year for which taxes are being filed.

A. A national disaster.

B. Tax changes by government. 

C. Deductions and credits as a result of a slow economy. 

D. All of the above.

A. December 31, 2014.

B. December 31, 2013. 

C. December 31, 2011. 

D. All of the above.

A. Always strive for planning strategies in December of that year.

B. Don't wait until January to find out about the different tax changes. 

C. Tax changes will be ready by February to apply in the new tax season. 

D. All of the above.

A. Will lower depending on new information that is gathered about the economy.

B. Be available for two years at a time. 

C. Rise to reflect the rising cost of living standards in the economy.

A. The cost of living standards are derived from the Bureau of Labor Statistics (BLS) Consumer Expenditure Survey (CES).  

B. Information is collected by survey from households and families on their buying habits and expenditures, their income and household size. 

C. The cost of living standards vary by location.

A. Food, housekeeping supplies, apparel and apparel services such as dry cleaning.  

B. Personal care products and personal care services such as hair cuts. 

C. Non-classified items taken into account by the national standards.

A. Providing documentation that supports the deductions.  

B. Providing documentation which supports the deductions at the time of filing his or her tax return. 

C. Providing documentation that substantiate their deductions right on the spot and in order to do so you must schedule an appointment with the IRS.

A. Credits.  

B. Adjustments. 

C. Deductions.

A. 33 percent.  

B. 15 percent. 

C. 39.6 percent.

A. An additional standard deduction for being blind and another one for being a senior.  

B. An additional standard deduction for being blind only. 

C. An additional standard deduction equal to his or her regular standard deduction.

A. An exemption for yourself and an exemption for every dependent on your tax return

B. An exemption for your spouse. 

C. Both A and B above.

These exemption amounts will be reduced if your adjusted gross income exceeds a certain amount. This process is called phase out. For single taxpayers, the exemption amount starts to be reduced gradually once their income starts going over $258,250 for 2015.

Itemized deductions

A. List of deductions you take on your Schedule A if you don’t wish to use the standard deduction.

B. You want to claim your itemized deductions if the amount is greater than your standard deduction amount but you don't have to.

C. The list of actual expenses you opt to take on your tax return in place of the standard deduction.

What about itemized deductions? Itemized deductions are your list of deductions you take on your Schedule A if you don’t wish to use the standard deduction. You want to claim your itemized deductions if the amount is greater than your standard deduction amount. Sometimes, you may just claim the standard deduction amount even if your itemized deductions are greater. It is always your option to claim either one. In this reading material it is assumed that you already know what are itemized deductions and the different basic items in taxation. You already know that your itemized deductions are the list of actual expenses you opt to take on your tax return in place of the standard deduction.

A. Must take your standard deduction.

B. Must take the actual deductions.

C. Take whichever one you want depending on your tax situation.

A. Medical expenses and gambling losses.

B. Investment interest expenses.

C. Casualty and theft losses.

If your income is over a certain amount and you are claiming many credits and deductions or claiming certain deductions, you may have to pay an Alternative Minimum Tax on your federal tax return. This certain amount is usually based on your filing status. The Alternative Minimum Tax exemption income limit amount for 2015 is $53,600. You would need to worry about filling out the worksheets to see if you are liable for Alternative Minimum Tax if you have an excess of credits and deductions for which you are benefiting under the tax laws.

Earned Income credit

A. For those individuals who don't earn any income.

B. A credit that is given only to taxpayers with children.

C. For those individuals with low income.

The Earned Income Credit is for those individuals with low income. This credit comes in very handy after you have overspent your money around the holiday time. This credit is to benefit especially taxpayers with children. The individual or couple with more children can benefit more from this credit than those with only one child. This credit is also for individuals without children. However, if the taxpayer does not have children, the amount of the EITC is very small. Remember, this is the credit that many Americans were claiming and for which very little regard was shown for the rules. Taxpayers were in violation of the Earned Income Tax Credit rules so miserably that the Internal Revenue Code had to change to provide for penalties at all levels for violation of these EITC rules. Everyone from the taxpayer to the tax preparer have to pay the price for not exercising due diligence when claiming the Earned Income Tax Credit.

A. $500 per return filed.

B. $500 total per tax season.

C. $1,500 per year.

Decedents

A. Your accountant.

B. Your estate.

C. Your funeral director.

When someone dies, everything is over. That is usually what many people think and the thought on everyone’s mind. Your family is hopefully left with certain security such as insurance that would cover your expenses and their basic living situation when you are gone to cover expenses at least for a temporary period of time. Unfortunately, many individuals don’t think they may die unexpectedly and they don’t think of the consequences of not having the proper insurance to at least cover basic burial expenses. Many people are wrong, not everything ends when you die. For example, when a taxpayer dies, the taxpayer still has to file a tax return. Everyone has to file a final tax return. Even if the taxpayer is dead, he or she must have their tax return filed. The estate is responsible for two kinds of taxes. One is the estate tax which has to do with the transfer of assets to the beneficiaries. The other one is the income tax which has to do with the income generated from the assets of the estate. Whichever kind of tax return you may have to file, the fact still remains that you do have to file a tax return when you are dead. When you are dead there are many changes. For example, a person who is not generous, all of a sudden becomes very generous and there is a tax for that.

A. Be filed jointly with the spouse.

B. Must be filed by the estate.

C. Must be filed in a timely manner.

Gift tax and being too generous

A. Gifts that are not more the annual exclusion for the calendar year are not taxable gifts.

B. Tuition or medical expenses you pay for someone are not taxable gifts and these gifts fall under the category of educational and medical exclusions.

C. Any gifts you make to your spouse are not taxable gifts.

A. Gifts that you make to a political organization for its use.

B. Gifts over $14,000 made to your friend to avoid her from becoming homeless.

C. A gift you made to your brother for $50,000.

A. The gift is made to your spouse.

B. Your share of the property ownership is more than the $14,000.

C. The total amount is not more the annual exclusion for the calendar year.

A. Gift all the proceeds to your spouse.

B. Gift to different charitable organizations increments of under $14,000 to each.

C. Gift all your proceeds to a charitable organization.

You can also see this situation when someone wins the lottery. They give all their proceeds to a charitable organization because they are very generous and not greedy at all. Then the Internal Revenue Service will send them a letter asking for their fair share of the gift they have made to the charitable organization or to any organization for this matter. Therefore, the moral to the story is - think before you exercise your generosity. Being too generous could cost you dearly.

Employer retirement plans

A. Medical and retirement plans.

B. Meals on the job.

C. Gifts and bonuses during the holidays.

On another note, employers have an option to set up retirement accounts for their employees. Some employees will weigh into the acceptance of the job whether the employer offers certain benefits such as medical and retirement plans. Some employees place more weight on the benefits offered by their employer than on the wages paid. The employee will more often than not accept a lesser paying job if that job offers the proper benefits such as health insurance and other fringe benefits.

A. Pay taxes on the money put aside for retirement.

B. Pay for out-of-pocket medical expenses.

C. Make contributions to employers for them to provide health benefits for all employees.

Foreign Earned Income Exclusion Credit

The tax law allows for a Foreign Earned Income Exclusion credit. As a United States citizen or resident alien, you are taxed on your entire income regardless of where you live. If you live abroad and earn money abroad, you may take advantage of the Foreign Earned Income Exclusion Credit. The foreign earned income exclusion rises to $100,800 for tax year 2015.

A. You are taxed on your worldwide income unless you qualify to exclude from income your foreign earnings.

B. You are liable for double taxation and there is no credit to alleviate this double taxation.

C. You never have to pay taxes to the foreign country for living and working there because you are U.S. citizen.

D. You qualify to exclude any amount of your foreign income up any amount even if is $500,000.

If you are a small business employer who provides health coverage to your employees, you can qualify for a tax credit. The amount of the small business employer health insurance credit is based on the number of employees and how many hours these employees work during the year. The small employer health insurance credit provides that the maximum credit is phased out based on the employer’s number of full-time equivalent employees in excess of 10 and the employer’s average annual wages in excess of $25,800 for 2015. The maximum credit increases to 50 percent of premiums paid for small business employers and 35 percent of premiums paid for small tax-exempt employers.

 A. The plan must be offered through a Small Business Health Options Program Marketplace which is also known as (SHOP).

B. The employer can qualify for an exception to the SHOP requirement.

C. This credit is available to eligible employers for two consecutive taxable years.

The Additional Medicare tax applies to you if your wages are in excess of $200,000. The Additional Medicare Tax rate is 0.9 percent. You must file IRS Form 8959 to pay this tax and send the form along with the Additional Medicare Tax and your tax return to the IRS. This tax started with tax years after December 31, 2012 and a 0.9% Additional Medicare Tax applies to Medicare wages, self-employment income, and railroad retirement (RRTA) compensation. The amounts are based on incomes of married filing jointly taxpayers that exceed $250,000 for Married filing joint taxpayers and $125,000 for taxpayers who file separately. A taxpayer who is single and file as Single, head of household or qualifying widow (or widower) with dependent child has an income set at $200,000. If the income is more than these set amounts, then a 0.9 percent Additional Medicare Tax applies to you.   

The Additional Medicare Tax was added by the Affordable Care Act (ACA). It applies to wages, railroad retirement (RRTA) compensation, and self-employment income over certain limits. Employers are held accountable for withholding the tax. RRTA is also subject to the Medicare Tax and to the Additional Medicare Tax if it goes over certain amounts. The additional Medicare tax applies only to certain individuals with incomes over certain threshold amounts previously mentioned. The Additional Medicare Tax also applies to many types of income such as income from self-employment.

If you are into investments, then you may have to pay the Internal Revenue Service a Net Investment Income Tax for 2015. The investment tax income limits are based on the taxpayer’s filing status. The 3.8 percent Net Investment Income tax applies to individuals, estates and trusts that have certain investment income above certain set amounts. If you are married and are filing as married filing jointly, this threshold amount is $250,000.

A. Wages, unemployment compensation.

B. Social Security benefits or alimony.

C. Most self-employment income.

A. Decrease your withholding allowances at work to avoid an underpayment of estimated tax penalty.

B. make extra estimated tax payments to avoid an underpayment of estimated tax penalty.

C. Either A or B above.

A. Net gains from the disposition of property.

B. Net gains from the disposition of property held in a trade or business.

C. Income which is excluded for regular income tax purposes.

So remember that if there is any income from investments, you may owe the investment income tax. Also, you may owe this tax if your income goes over certain limits. These limits are the income thresholds which apply to your filing status as previously mentioned. If you owe the Net Investment Income Tax, you must use Form 8960 with your tax return.

Same Gender Marriage

A. The Internal Revenue Service. 

B. California. 

C. Oregon. 

It took many states in the United States and many countries in the world to allow equal benefits to their citizens who are in same sex relationships for the Internal Revenue Service to finally follow the lead. States such as California offered the benefit of same sex taxpayers to file jointly on state tax returns. Then, you would have to file another two tax returns for the taxpayers as single individuals. Now, same sex couples can also file as married filing jointly on their federal tax returns. The tax return figures and filing status for federal will just flow through to the state tax returns. The protections as married individuals under federal tax law have also been incorporated for same-sex married couples started on September 23, 2013.

A. Instructions on claiming refunds. 

B. Instructions on adjusting FICA tax and employment tax items with respect to certain benefits provided for same sex spouses. 

C. Both A and B above. 

A. Only if they wish to do so. 

B. Any time within 20 years.

C. And if they owe tax for previous years as MFJ, they must file by the end of 2013. 

The IRS has a general rule recognizing a marriage of same-sex spouses that was validly entered into in a domestic or foreign jurisdiction whose laws authorize the marriage of two individuals of the same sex even if the married couple resides in a domestic or foreign jurisdiction that does not recognize the validity of same-sex marriages.

A. Revenue Ruling 2003-17. 

B. The Windsor Decision.

C. The Defense of Marriage Act (DOMA). 

In 1996, the Defense of Marriage Act (DOMA) passed in 1996 by Congress and signed by President Bill Clinton, forbade the federal government from recognizing same-sex marriages. However, later the Windsor decision invalidated Section 3 of the 1996 Defense of Marriage Act (DOMA) that barred same-sex couples who were married from being treated as married under federal law. The notice gives examples of Code requirements under which the marital status of the participants is relevant to the payment of benefits. Additionally, the notice provides guidance on how to satisfy those requirements in light of Windsor and Revenue Ruling 2013-17, and describes when retirement plans must be amended to comply with Windsor, Revenue Ruling 2013-17, and Notice 2014-19 Recognition of marriages of same-sex couples for tax purposes.

A. Revenue Ruling 2003-17. 

B. The Windsor Decision.

C. Defense of Marriage Act (DOMA). 

A. Revenue Ruling 2003-17. 

B. The Windsor Decision.

C. Both A and B above.

If an employer provided health coverage for an employee’s same-sex spouse and included the value of that coverage in the employee’s gross income, the employee can file an amended Form 1040 reflecting the employee’s status as a married individual to recover federal income tax paid on the value of the health coverage of the employee’s spouse for all years for which the period of limitations for filing a claim for refund is open. The Winsor decision which invalidated same sex couples from being able to file as married couples was reversed and now same sex couples can benefit from the tax law as other couples. They no longer have to file as single taxpayers. Same sex couples can now file as married filing jointly or as married filing separately.

The Affordable Care Act has become a big ticket item. The Affordable Care Act has made health care coverage affordable to millions of low income Americans. The Affordable Care Act contains provisions for health insurance coverage and financial assistance options for individuals and families. This new law is administered by the Internal Revenue Service and is included in the tax code. The provisions require you and each member of your family to have qualifying health insurance and it is called minimum essential coverage. You and everyone on your tax return must have minimum essential health coverage in order to avoid a penalty on your tax return. However, you or your family members can be exempt from coverage or make a shared responsibility payment when you file your federal income tax return if you don't qualify to be exempt.  

The Small Business Health Care Tax credit helps small businesses and small tax-exempt organizations afford the cost of offering coverage to their employees. The Small Business Health Care Tax Credit is a tax incentive offered to employers to help fill the health care coverage gap. The Small Business Health Care Tax credit is specifically targeted for those businesses with low and moderate income workers.

A. Small Business Health Care Tax Credit. 

B. Moderate Income Credit.

C. Small Tax-exempt Organization Credit.

A. Get higher EIC amounts. 

B. Afford health insurance coverage.

C. Qualify for more of the Child Care Credit.

Starting in 2014, individuals and families who get their health insurance coverage through the Health Insurance Marketplace may be eligible for the Premium Tax Credit.

If you file your tax return using the filing status Single, Married Filing Jointly, Head of Household or Qualifying Widow/Widower, you may be eligible for the premium tax credit if you meet other criteria. However, if you are married and you file your tax return using the filing status Married Filing Separately, generally you will not be eligible for the premium tax credit. As you may already know there are many limitations set in place for those who file as married filing separately.

If you have not applied for the proper health coverage by tax time, you will have to figure out at that time if you qualify for exemption, if you qualify for the Premium Tax Credit or if you have to make an individual responsibility payment. The individual shared responsibility provision requires you and each member of your family to have minimum essential coverage, an exemption from the responsibility of having minimum essential coverage, or make a share responsibility payment when you file your return in in 2016. Under the Affordable Care Act, the Federal government, State governments, insurers, employers, and individuals share the responsibility for health insurance coverage beginning in 2014. As a result, you will report minimum essential coverage, report exemptions, or make any individual shared responsibility payment when you file your 2015 federal income tax return in 2016.

The manner in which the authorities will know about your health coverage compliance depends on your situation. It could be that are already covered at work – there is a tax form for that. It could be that you are covered through the health insurance exchange – there is a tax form for that too. Health insurance coverage is reported either on Form 1095-A, Form 1095-B or “Form 1095-C. Depending on what kind of taxpayer you are, you may have to file Form 1095-A, Form 1095-B or Form 1095-C. Starting in tax year 2015 there will be new filing requirements and new forms to complete and file regarding minimum health coverage. The forms required will depend on the different circumstances. Form 1095-A will required of those who purchased their health insurance from the health insurance marketplace. Taxpayers will be required to disclose their health insurance which is purchased through the health insurance Marketplace. Then there is Form 1095-B which is required of individuals and also of providers of minimum essential coverage whom are not exempt from minimum essential coverage. Providers are required by law to furnish Form 1095-B to the recipients of minimum coverage. Finally, there is Form 1095-C which is expected from large employers or Applicable Large Employers. Most taxpayers will have this Form 1095-C to present at tax preparation time.  

If you are an individual who is enrolled in a qualified health plan through the Marketplace, information will be reported to the Internal Revenue Service on you on Form 1095-A by January 31. Form 1095-A was provided to taxpayers by January 31, 2015 for the preparation of their 2014 tax returns. This reporting will usually be done by qualified Health Insurance Marketplaces. Form 1095-A will be provided to taxpayers in order for them to accurately prepare their tax returns. The information provided on Form 1095-A will facilitate the claiming of the premium tax credit for the taxpayer. If the taxpayer has received any advanced premium tax credit amounts, Form 1095-A will help them reconcile the advance premium tax payments when they actually claim the premium tax credit on their tax return. Form 1095-A is provided to taxpayers because they enrolled in health insurance coverage through the health insurance Marketplace.

Then, we have Form 1095-C which is essentially identical to Form 1095-B except that it pertains to employer health insurance coverage and your employer will usually fill it out and provide it for you. For those of you who are lucky to have your employer worry about your health insurance coverage, this is where all your information about you and your family’s health insurance coverage is reported. This will be the case if your employer is a fairly large employer or an Applicable Large Employer. The employer or employers who are under this category will send you Form 1095-C regarding your health coverage information. You will use Form 1095-C to prepare your tax return and include the pertinent essential coverage information on your tax return. Form 1095-C is what many taxpayers will provide their tax preparer every tax season to have the tax preparer prepare the tax return for the year.

Sometimes special situations get in the way and you are simply not able to file your tax return by the normal due date. Don’t despair. You can send an automatic extension of time file a tax return. Yes, you heard right, if you cannot file your tax return on time, you can request an automatic extension of time to file. Send the money you owe with the extension, though. Please note that an extension of time to file a tax return does not grant you an extension of time to pay the tax liability. You may be able to get an automatic 6-month extension of time to file your tax return. In order to ask for your extension, you must use Form 4868, Application for Automatic Extension of Time to File U.S. Individual Tax Return. You must file this form by the due date of your tax return for filing your calendar year report or your fiscal year return. This time is usually April 15 or if the April 15 falls on a Saturday, Sunday or legal holiday, then your tax return is due the following business day.

It is common knowledge that April 15 is the due date of your tax return every year. April 15 of each year is the due date for filing your federal individual income tax return if your tax year ends on December 31. If your tax year ends at any other time, then the usual filing deadline would be on the 15^th day of the fourth month after your tax year ends. Also, your return is considered filed timely if the envelope is properly addressed and postmarked no later than April 15. Remember, if you cannot file by the due date of your tax return, then you can request an extension of time to file. It is extremely important that you know that an extension of time to file will not extend the time to pay. You must also realize that an extension of time to file will not save you money on interest and late payment penalties. Finally, as stated previously, an extension of time to file is not an extension of time to pay. 

IRA - One Rollover per year limit

A rollover allows you to change your IRA account to a different account or to a different kind of IRA. Most of the time IRA rollovers are voluntary, but sometimes you may simply not have a choice. If your ties with the company you work for end, you may be forced to rollover your individual retirement account (IRA) which you have established with that company. Different companies have different retirement plan set-ups and even work with different financial institutions which deal with their individual retirement account matters. The company which you sever from may not be using the same financial institution which your new employer is using. In this case, your only option would be to rollover your IRA into another IRA with a different banking institution. 

Health care: individual responsibility

The health care minimum coverage obligation is hardly new news now. Just in case you don’t own a TV set or you don’t ever logon to the internet, everyone must have basic health insurance coverage in place by now. That is unless you are legally exempt from acquiring minimum coverage. Even if you are legally exempt from acquiring minimum coverage, you should get some form of protection. You and each one of your family members must get minimum essential coverage, qualify for coverage exemption or make a shared responsibility payment when you file your 2015 tax return. Be smart about this. Making the shared responsibility payment on your tax return does not automatically cover you for health insurance. This shared responsibility payment is more of a penalty for not having basic health insurance coverage. If something happens to you, you will probably be restricted to emergency health care at your county hospital and we all know how that is like. The county hospital leaves you feeling as though they should pay you and not the other way around.

Then again, you may be exempt. How are you considered exempt depends on your exemption eligibility. Being exempt has to do with your income. If the minimum amount of your annual premium is more than 8 percent of your household income, you may be exempt. You may also be considered exempt if there is a gap in coverage of less than three consecutive months. If you are going through some kind of hardship and therefore you are not able to get coverage, you may be exempt for that reason. You could also be exempt if you belong to a group which is exempt from the requirement to acquire coverage. Once again, even if you are exempt from acquiring minimum essential health coverage, you should find some kind of protection because you never know what can happen.

However, if you received too much money in advance for the premium tax credit, you may not have to pay it back. After all, estimating the amounts is not exact science and the end results will be under, over or close enough. The goal is that the amounts are close enough. Paying the amount back depends on your household income and family size. Paying the overpayment back depends on how much money you make under or over the poverty level. If your household income is less than 400 percent of the poverty level, you may be saved from paying the money back or at least will not have to pay the entire amount back. On the other hand, if your income is 400 percent or more above the poverty level, you definitely must repay the entire amount which was overpaid. On the other hand, do the calculations, you most likely will not need to pay the advance Premium tax credit payments back if you qualify.

So remember Form 1095-A is the form used to report minimum essential health coverage enrollment to the Internal Revenue Service. In this Form 1095-A, you will find all the pertinent information on the insurance coverage for the insurance recipient. This is the form that will be used at the end of the tax period to reconcile the information between the Marketplace and the Internal Revenue Service. This is the form that will be required to be furnished by the Marketplace to the insured and to the Internal Revenue Service. This form will also be requested by the tax preparer in order to prepare the taxpayer's tax return at tax time. Form 1095-A will be required to be provided in print form. However, the recipient can agree or must consent to receive this form by electronic means if the Marketplace wants to use this method of providing the form.

The Medicaid payments that may be excluded from income are the payments excludable under Section 131 of the Internal Revenue Code. These are the Medicaid waiver payments. To be excludable the payments must fall under the “difficulty of care” category. The individuals that would require this type of care are individuals who would need to be in a hospital, nursing facility or care facility in order to get this type of care. Therefore, in order to be able to exclude these payments as waiver payment under section 131, the care must be provided in the provider’s place where the provider and the person taken care of live. Any care that is provided off the care provider’s home is not eligible to be excludable. The care provider’s home must also be the care receiver’s home and the care provider must not have a separate home. The difficulty of care idea requires the care taker to be so devoted to the care of the individual, that it is a requirement for the care taker to also live in the same home as the individual receiving the care. This requirement is very well thought because if it wasn’t, there could be too much room for abuse of the Medicaid waiver payment exclusion provision.

On December 19, 2014, a new Tax Increase Prevention Act of 2014 was signed into law. The new tax extenders are part of another extender that expired on December 31, 2013 and even some from 2009. This new tax law affects many tax benefits and deductions that were set to expire at the end of 2014. There extenders include items for individuals such as the tax deduction for mortgage insurance premiums and deductions for qualified tuition and related expenses. Additionally, the new Tax Increase Prevention Act of 2014 includes tax break extensions for business such as the tax credit for research activities and the work opportunity tax credit.

Tuition and fees deduction

One of these expiring deductions which are part of the Tax Increase Prevention Act of 2014 is the tuition and fees deduction. Taxpayers who claim these deductions are individuals who attend school and have qualifying school expenses such as for registration and books. You have a tuition and fees deduction available if you, your spouse or any of your dependents are going to school and you have certain qualifying education expenses to deduct. You can take a tuition and fees deduction directly on your Form 1040 return for federal as an adjustment to income. You don’t have to itemize your deductions in order to take the tuition and fees deduction for you or your qualifying person. However, you probably should compare credits and deductions before you claim the tuition and fees deduction on Form 1040. The American opportunity tax credit or the lifetime learning credit may be a smarter choice to make. You could also take a business expense on Schedule A instead of claiming the tuition and fees deduction. Look at all four of these and make your choice accordingly. You cannot use the same expenses for other credits or deductions if you use them for the tuition and fees deduction. Also, you can only claim one of the deductions or credits and not all four. Choose the one that will give you the best tax advantage.

Another of these expiring deductions which is part of the Tax Increase Prevention Act of 2014 is the deduction for educator expenses. If you are an eligible educator in the kindergarten through the 12^th grade and if you meet other requirements, you can take an educator expense deduction on your tax return. The amount you can deduct up to $250 for amount you paid for books, supplies, and other items such as equipment for use in the classroom. This credit is not offered to educators higher than the 12^th grade. Those colleges and universities are making a lot of money and it would be a shame that they don’t provide their overpaid instructors with supplies for the classrooms. With grade schools and high schools, it is a different story. These classrooms are normally over-packed to accommodate the large amount of students enrolled. These schools are dependent on grants from state and the federal government to operate. For good reason, there is not enough money to go around to provide for supplies for the classroom. They should though. How else can a teacher teach if he or she does not have chalk or paper to perform his or her work. In additional to being a school teacher who teaches grade kindergarten through the 12^th grade, the teacher must have worked at least 900 hours in a school year for providing elementary and secondary education. This will exclude any part time teachers from trying to take an educator expense tax deduction.

Deduction for state and local general sales taxes

In order for you to deduct certain taxes you paid, you must meet some fairly simple requirements. First, you must have paid the tax in the year you are trying for the deduction. Second, you must be the person responsible for paying the tax. To be responsible for paying the tax means that the tax is imposed on you. This is a very simple concept as it makes very much sense. For the most part, any items you want to deduct can only be claimed if, both you paid for the item and you have the responsibility to pay for the item. The requirement to have paid and to also be responsible to pay is a tax code requirement for almost every credit and tax deduction you can take.

One of these types of taxes was set to expire at the end of 2014. This is the state and local general sale taxes that normally go on line 5a of Schedule A. Now this tax is part of the Tax Increase Prevention Act of 2014 and they continue to be deductible as usual until December 31, 2014.  

Sometimes the ability to be able to donate your individual retirement account proceeds to a charitable contribution can be an important tax move. This could be due the taxpayer being in a high tax bracket and making the donation would lower the rate and ultimately provide a greater tax benefit. The last day for making a charitable donation from an IRA was supposed to be December 31, 2014. This benefit became part of the renewed tax credits and deductions of the Tax Increase Prevention Act of 2014. As a result, the exclusion from income of qualified charitable distributions from IRAs was extended and can be claimed in tax year 2014. However, we need to wait and see if this provision will also be extended for tax year 2015. It is hard to tell so you just need to keep your fingers crossed and be ready to take action toward the end of the year when an extension will be announced if there is going to be an extension of this provision for tax 2015.

Making adjustments for energy conservation to your home could bring both tax savings and also energy savings. Everyone wins when someone decides to make energy conservation improvements to their home. The two residential energy credits are the residential energy efficient property credit and the nonbusiness energy property credit. Taxpayers who make qualified energy efficient improvements to their home can get a credit of 10 percent of the cost. These improvements include adding insulation, energy efficient windows and doors and certain roof installations. However, installation of these items is not included in the credit calculation. Certain high efficiency heating, air conditioning systems, high efficiency water heaters and stoves that burn biomass fuel including the installation costs for these, can be used to claim an energy efficiency credit. The life time limitation on this credit is $500 and only $200 can be used for energy efficient windows. Any qualifying improvements made to the property must have been made to a taxpayer’s principal residence in the United States and placed in service before January 1, 2014. The nonbusiness energy property credit has been extended through December 31, 2014 as a result of the Tax Increase Prevention Act of 2014. There is no information as to any extension beyond December 31, 2014.

The mortgage Insurance premiums deduction is another one of these items in the Tax Increase Prevention Act of 2014 provision. This deduction was extended through December 31, 2014 and there is no word whether it will be extended beyond December 31, 2014. The mortgage insurance premiums deduction is for qualified mortgage premiums paid in 2014. There are talks about a possible extension of this deduction but nothing has been said for certain.

Many taxpayers think that just because money they received for school is money you receive because you are at a lower income tax bracket, that it must be totally tax free. However, some of these grants could be taxable depending on the circumstances. Scholarships and other grants similar to scholarships such as Pell grants and fellowships can be tax free if they meet certain requirements. Normally you will meet the requirements if you are candidate for a degree in a school that is in the business of education by maintaining a regular faculty and a curriculum with the normal student attendance. Also the amounts that you received and want to make excludable are used to pay for tuition and fees required for enrollment at the education institution. Any other amounts which you receive that are not used for these purposes such as amounts used for room and board, travel and amount received for payment for teaching or research must be included in taxable income.

As with the other deductions and credits adjusted for annual inflation, the standard mileage rates for 2015 are also being adjusted for the cost of living increase in 2015. The standard mileage rate for 2015 is 57.5 cents per mile for miles driven for business purposes. This rate was 56 cents for 2014. However, the standard mileage rate for 2015 decreases for miles driven for medical or moving purposes to 23 cents. For 2014 the rate for medical and moving purposes was 23.5 cents. If you drive your car for charitable organization contribution purposes, the mileage rate is 14 cents per mile driven in 2015. The rates are based on a study of the usual costs of operating a car which includes depreciation, insurance, repairs, maintenance, gas, oil and even tires. The study was probably done a long time ago and now the costs are being adjusted to reflect the new cost of living increases or annual inflation. As to why the cost of mileage driven for medical purposes decreasing seems to be due to the ACA less emphasis placed on deductibility of medical expenses. The medical expense deduction allowances have actually decreased to encourage people to pay for the affordable care act minimum coverage insurance instead. With the new requirements and with more and more taxpayers being enrolled there will be less individuals with high medical costs.

If a taxpayer is claiming accelerated depreciation such as the section 179 deduction, he or she will not be able to deduct the business standard mileage rate of 57.5 cents per miles on that vehicle. The section 179 deduction is considered a deduction for actual business expenses. The standard mileage rate includes depreciation in the 57.5 cents per mile calculation. The code continues to disallow a standard mileage deduction for fleet owners such as taxicabs. A fleet owner is someone who has more than four vehicles used simultaneously such as is common with limousines and taxicabs.

Make sure you mail your tax return to the correct address. You will see a list of places to mail your tax return. If you happen to mail to the wrong area, it will still get processed but the processing of your tax return may be delayed. There has been a change to where you mail your tax return if you are Missouri resident. Missouri residents need to mail their tax returns to a different address starting with tax returns filed for tax year 2014. The complete addresses of where to mail your tax return are listed in Publication 17.

If you have proceeds from stock transactions, you will receive a Form 1099B from a broker or barter exchange. Form 1099B will show all proceeds of all stock transactions. The new thing to note for this year for Form 1099B is in regard to wash sales which have occurred at market discounts. The sale of a debt instrument which is a wash sale and has occurred at market discount needs to be coded as code “W” in box 1f. Any amount of a wash sale loss will be disallowed and entered in box 1g of Form 1099B.

Everyone is on fraud and identity theft watch nowadays. Identity theft has turned into a big money maker for many. Not only are identity theft criminals making money on identity theft but also the businesses which offer the protection against identity theft. You see ads on TV all the time about identity theft programs that can guard your social security and offer you defense against the identity fraud thieves.

The criminal gets information on the victim in a number of ways. Shockingly to hear that criminals use a method called “shoulder surfing” to get your information. This is quite alarming! You mean to tell me that this is so common practice that they even have a name for it. You know that if there is a name for this, it is something that is already happening all the time. Other methods used to get a victim’s information involves digging through trash cans for personal information. There are many other means of obtaining the victim’s personal information. The different statute violations will indicate which methods are used by criminals. There are few such as Identification fraud, credit card fraud, computer fraud, mail fraud, wire fraud and financial institution fraud. Violation of these is considered a felony and the penalties for violation of these statutes can be as high as thirty years in prison.

Now the Internal Revenue Service gives you the option to use IRS Direct Pay to pay your taxes. The service is safe, easy and free. Previously, the service was available through a third party who would charge you a convenience fee for paying electronically. Now, you can make your tax payment using your checking or savings account with IRS Direct Pay. The best part is that it is a free service. This is a new feature added by the Internal Revenue Service for the taxpayer’s convenience. The taxpayer can now have his or her refund directly transferred to his or her bank account and get the refund much faster than by receiving a paper check. 

If you live in a large city, you know how horrible finding parking can be. When you do find parking, the expense of parking is really up there. Also, if you live in a large city, you know about the traffic congestion nightmares. You know how congested the traffic is for many trying to get to work. It only makes sense that there are incentives in place for finding alternative transportation methods to commute to work.

An FSA is a flexible spending account arrangement set up through an employer. For 2015 the salary reduction contribution limit that an employee can request is limited to $2,550. A flexible spending arrangement (FSA) is a type of cafeteria plan. This type of plan allows employees to elect to receive cash instead of benefit that can be excluded from wages. If the employee chooses the benefit instead, the benefit will not be considered taxable. The nontaxable benefits that the employee can elect to receive instead of cash are accident and health benefits, adoption assistance, dependent care, group-term life insurance or health savings accounts (HSAs).

As part of the Tax Increase Prevention act of 2014, you can make a tax-free distribution from an individual retirement plan to your charitable organization. The law was extended through December 31, 2014. You qualify for this extension for your contribution made by December 31, 2014 if you age 70 ½ or older and you made a qualified charitable distribution. Your charitable distribution transfers were made to an eligible charity and it could be up to $100,000 per year. Any amounts distributed can be excluded from income and you don’t have to itemize to enjoy this benefit. This amount distributed can be counted towards meeting the required IRA required minimum distribution. This benefit originally expired at the end of 2013 but was extended to December 31, 2014. However, there is no word of an extension beyond December 31, 2014 at the moment.

Another benefit that was part of the extended Tax Increase Prevention Act of 2014 is bonus depreciation. This benefit was a benefit of 50% bonus depreciation for businesses. The extension was through December 31, 2014. There is no word at the moment of any further extensions for this benefit.

Extension of increased expensing limitations and treatment of certain real property as Code section 179 property

Part of the small business stock that is held for more than five years qualifies to be excluded from gross income. The exclusion has been 50 percent but was temporarily increased to 100 percent through December 31, 2014. The extended temporary exclusion of 100 percent of gain on certain small business stock was set to expire on December 31, 2014 and it does not seem to be any indication of this provision being extended beyond December 31, 2014. Taxpayers had until December 31, 2014 to take advantage of Section 1202 provision which allowed them to exclude 100% of the gain realized on the sale or exchange of qualified small business stock. After that and if the provision is not extended beyond December 31, 2014, the exclusion will revert to only a 50% exclusion. Furthermore, this 50% exclusion will be subject to the Alternative Minimum Tax and therefore not much of a tax savings will be left over after you apply the Alternative Minimum Tax.

The second generation biofuel producer credit was extended by means of the Tax Increase Prevention Act of 2014. It will expire on December 31, 2014 for biofuel sold or used in 2014. If the credit is extended, you can continue to claim it beyond December 31, 2014. There is currently no word to whether this credit will be extended beyond December 31, 2014.

The whole world is looking for ways to be more energy efficient. Now we are all well aware of the pollution caused by certain energy producing facilities and products. May individuals are trying their hardest to come up with new ways to create energy that is more environmentally friendly. As a result of this effort, our world will become a cleaner and safer place to live. Taxpayers and companies who are seeking ways to improve the environment will most often be compensated by different new tax laws that reward them for their environmentally sound efforts.

Many taxpayers choose to be self employed and enjoy the freedom from being their own boss.  Most of the time, self employed individuals are self employed voluntarily for tax purposes, but other times self employment treatment is not voluntary. Your employer could have a different set-up where you are considered to be self employed for tax purposes even though you really are not self-employed. You could be a statutory employee, for example, and be responsible to pay your own taxes on the self-employment income. You would be responsible for filing a tax return just like if you were self employed although you are really not self-employed. The good part of this is that you would be able to deduct business expenses incurred as a statutory employee. What is new in regards to self-employment income? The amount for earnings from self-employment income or that are subject to social security tax is $118,500 for tax year 2015. Therefore, if you earned more than $118,500, the amount that goes over this amount will not be subject to social security taxes. However, in regards to Medicare, there is no such limit. Every penny you earn is subject to Medicare tax.

If someone uses your social security number to file a tax return, then you are a victim of tax related identity theft. The tax identity thief may file a tax return or create false documents such as a fake Form W-2 to file fraudulent tax returns with your social security number. Being a victim of tax related identity theft can cause a number of problems which include filing issues with the Internal Revenue Service, not being able to file your tax return electronically, and the reporting wages to your name which you have not earned will show for your social security number. Then, if the items do not match with what you are reporting, this could trigger an audit with the Internal Revenue Service and other tax agencies such as your state. However, usually the identity theft goes further than just identity theft for tax purposes. The identity thief usually would also start getting credit cards in your name and will most often ruin your credit and your financial life.

Many changes to the tax laws occurred after many meetings and hearings on many tax issues involved. A whole many of these tax changes happen toward the end of the year. Some of the tax changes such as the changes that pertain to annual inflation adjustments are anticipated probably a year or more in advance. However, many others are just a result of interested individuals fighting to get the new tax law changes happens in the course of the year. Every year, there are many new tax credits and tax deductions available to taxpayers. Some special deductions occur as a result of a national disaster and many times it is offered only to the individuals directly affected by these natural disasters. Usually these types of credits or deductions seek to compensate the victim for financial loss as a result of the tragedy. Other new credits or deductions are a result of the economy and the governments make certain efforts to boost the frail economy.

The most notable tax changes that Obama made was the Affordable Care Act and the treatment of same-sex couples with full equality under the tax law. Now as a result, all or most Americans have to have minimum essential health coverage and all of it is administrated by the Internal Revenue Service through the filing of tax returns. Also, now same-sex couples can enjoy the same tax privileges as all couples under the tax code as a result of the Obama proposed changes.