Category Archives: Types of Deductions

Changes in Circumstances Can Affect Advanced Payments of the Premium Tax Credit

Latest Breaking News

Individuals who purchased health insurance coverage from the Health Insurance Marketplace may be getting advance payments of the premium tax credit to help pay for health insurance coverage in 2014.

If they are, it is important to report changes in circumstances, such as changes in income, marital status or family size, to the Health Insurance Marketplace when they happen.

Receiving too much or too little in advance payments of the premium tax credit can affect refunds or balance due when individuals file federal tax returns in 2015.

Reporting changes will help avoid getting a smaller refund than expected or even owing money not expected to owe.

Publication 5152, Report changes to the Marketplace as they happen, is available on www.IRS.gov/aca. Go to www.HealthCare.gov for information about health insurance coverage and financial assistance.

Source: IRS.gov Newsletter

AN EDUCATED TAXPAYER IS OUR BEST CLIENT.  NEED HELP?  CALL (619) 589-8680 TODAY!

For more than 30 years R. Patrick Michael has been preparing tax returns for individuals, small businesses, cottage industries and in-home child care providers. Pat is a recognized child care provider tax expert, and has been providing educational seminars for child care providers in San Diego County for the YMCA Child Resource Services for more than 18 years.  Pat and his team have built a following that is comprised of long-term clients, new relationships and word-of-mouth referrals. Child Care Tax Specialists take care of their clients year-round with tax preparation, business entity creation and support, as well as tax planning for retirement, and estate planning.

Critical IRS Deadlines in the Year 2014 – June through December

300X250 Focus Blurb AdNow is a good time for you to do a mid-year health check on your record keeping and tax status.

Give us a call at 619-589-8680 and let’s set up a time for you to come in.

June 2, 2014

Deadline for financial institutions to send out Form 5498 to report balances in an individual retirement account for the year 2013.

June 16, 2014

2nd quarter estimated tax payments due for the 2014 tax year. (The normal deadline is June 15th, which falls on a Sunday, so the deadline is pushed to the next business day.)

Deadline for US citizens living abroad to file individual tax returns and to pay any tax due. You can request an additional 4-month extension (Form 4868). (You can request an automatic extension by April 15th instead if you want to.) Two tax breaks important for Americans working abroad are the Foreign Earned Income Exclusion and the Foreign Tax Credit, .

June 30, 2014

Deadline to file Foreign Bank Account Report for the year 2013. This report is required if you have over $10,000 (in aggregate) held in foreign bank accounts. Foreign Bank Account Reports have a new form number (FinCEN Form 114) and must be filed electronically. Extensions of time to file are not available.

September 15, 2014

3rd quarter estimated tax payments due for the 2014 tax year.

Final deadline to file corporate tax returns for the year 2013 if an extension was requested. (Forms 1120, 1120A, 1120S).

Final deadline to file trust income tax returns (Form 1041) for the year 2013 if an extension was requested.

Final deadline to file partnership tax returns (Form 1065) for the year 2013 if an extension was requested.

October 1, 2014

Final deadline for self-employed persons or small employers to establish a SIMPLE-IRA for the year 2014.

October 15, 2014

Final deadline to file individual tax returns (with extension). (Forms 1040, 1040A, 1040EZ.)

Last day the IRS will accept an electronically filed tax return for the year 2013. If filing after October 15th, you’ll need to mail in your tax return for processing.

Final deadline to fund a SEP-IRA or solo 401(k) for tax year 2013 if you requested an automatic extension of time to file.

November 2014

Start planning any year-end tax moves.

December 1, 2014

If you are covered by an HSA-compatible health insurance policy as of December 1st, you’ll be eligible to contribute the full amount to a Health Savings Account for the year.

December 31, 2014

Last day to make any tax moves for the year 2014. Last day to set up a solo 401(k) for self-employed persons.

Marital status on this date determines your marital status for the whole year.

Source: Income Tax Deadlines; Critical IRS Deadlines in the Year 2014

Are You Depreciating Your Household Items Correctly?

Depreciating  household items can represent a significant tax savings!

Tax Refund Ahead SignWe always meet with our new child care provider clients to check their past deductions because many times they have not properly depreciated the day-to-day materials, furniture, and household items they use in the daily operation of their business.

We want to know about these items – even if they were purchased before the business was started. These can result in considerable tax savings for you.

It’s true!  You are entitled to claim depreciation on household items that you purchased BEFORE your business was even started.  In fact, you should depreciate all the items based on the lower end of the purchase price (your tax preparer will guide you) or the of the item(s) when they were first used in your business.

The list can include: beds, linens, towels, tables, chairs, desks, refrigerator, freezer, washer/dryer … are you getting the picture.  Any of the items that you are using in support of your child care business is a legitimate deduction.  This includes little stuff too, like pictures on the wall, garden hose, tools (for use outside).

The IRS Child Care Provider Audit Technique Guide states, “For many providers, when they start their business many items that were personal use only are used in the business.  They are entitled to depreciate the business use portion of those assets.”

 

For more than 30 years R. Patrick Michael has been preparing tax returns for individuals, small businesses, cottage industries and in-home child care providers. Pat is a recognized child care provider tax expert, and has been providing educational seminars for child care providers in San Diego County for the YMCA Child Resource Services for more than 18 years.  Pat and his team have built a following that is comprised of long-term clients, new relationships and word-of-mouth referrals. Child Care Tax Specialists take care of their clients year-round with tax preparation, business entity creation and support, as well as tax planning for retirement, and estate planning.

NEED HELP?  CALL (619) 589-8680 TODAY!

How to Deduct Expenses at the NAFCC Conference in Orlando, Florida

Follow IRS rules about business travel and deductions and enjoy the trip!

Are you planning to attend the National Association for Family Child Care Conference in Orlando, Florida on July 11-12, 2014?

NAFCC2014_Poster_webThe program guide  gives you all the details about workshops and seminars that will be taking place, including valuable business practices for record keeping and general business administration of your child care business.

  • You will have the opportunity to meet keynote speakers, like Tom Copeland, who will be conducting several workshops.
  • Interface with other child care providers from around the country and see what they are doing for their business.

WHAT’S EVEN BETTER – YOU HAVE DEDUCTIONS! Continue reading →

At-A-Glance Child Care Tax Document and Resource Center

Child Care Tax Center

Baby with Blue ShoesPublication 587 – Business Use of Your Home (See Day Care Facility)
The purpose of this publication is to provide information on figuring and claiming the deduction for business use of your home. It contains special rules for day care providers including standard meal and snack rates. Continue reading →

IRS Forms and Schedules You’ll Need

On Your Mark… Get Set ….. Go!

Image Credit Market Watch MW-BN104_taxtim_20131014120127_MG

GETTING NERVOUS? CALL ME! 619-589-8680

The IRS has recently announced that they will not start processing 2013 tax returns until January 31, 2014. This means there is no reason to efile or mail in your tax forms before then.

Before sending in your tax forms, here’s a review of the key business tax forms you must file and the order you should be filling them out. Continue reading →

Track your hours BEFORE and AFTER children are present

PROVIDING CHILD CARE IS NOT A 9-5 JOB!

Before and After Hour ChecklistYour job starts well before children are present and goes on well after the last child has left your care.

Unfortunately, it is exactly for that reason that so much of your time never gets counted, as it should.

Most child care providers give an approximate idea of how long they spent doing “chores”.

Unfortunately, many “lo-ball” on the actual amount of time they spend doing chores before and after children are present.  We believe this checklist will help you.

First, don’t think of it as an administrative chore.  That makes it “work”.  Instead think of it as truly getting to see how well you manage your time – in real numbers.  You will either discover that you know your day down to the minute, or you will discover you don’t and have shortchanged yourself.

Click HERE to download a word version of this checklist, that you can customize to your specifications.  Click HERE for a pdf version.

 

 

Safe Harbor Rule Does Not Favor Child Care Providers

CAUTION NEW IRS RULING!When this rule was introduced in early 2013, the new rule allowed for family child care providers to claim up to $1,500 in house expenses on their 2013 tax return, without being required to produce receipts, (IRS Rev. Proc. 2013-13).

Recently, the IRS updated this ruling, and we feel even stronger now that for the vast majority of our child care provider clients this rule is not in their favor and we will not be using it.  We can confidently say that most, if not all, of our client’s deductions exceed the limit of $1,500.00.

Our best advice is if you are not one of our clients, call us at 619-589-8680.  Otherwise, we urge all child care providers to seriously question any tax preparer who encourages you to use this deduction, unless you completely understand how it will impact your return.  Once done, you can’t amend this portion of your tax return.  You are locked in.

How To Calculate Time-Percentage

What do we mean by Time Percent?

This percent is determined by adding up the number of hours you are using your home for business purposes and dividing this number by the total number of hours in the year (8,760). There are two types of hours to include: hours when day care children are present in your home and hours when children are not present but you are engaged in business activities. Continue reading →

Recordkeeping and Taxes Go Hand-In-Hand

ORGANIZING YOUR CHILD CARE BUSINESS RECORDS FOR SUCCESS!

Employment of Child Care Workers, BLS, 2012More than half of my clients are child care providers, and many of them became clients after attending one of my tax and record keeping seminars to the child care community through YMCA Child Resource Services. According to a recent report, the Bureau of Labor claims that one-third of all child care providers operate as self-employed businesses, and many of these child care providers care for children in their home. Continue reading →