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Job Hunting Expenses

job_huntingMany people change their job in the summer. If you look for a new job in the same line of work, you may be able to deduct some of your job hunting costs.

Here are some key tax facts you should know about if you search for a new job:

  • 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.
  • Work-Search 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 payment of the premium tax credit in 2014 it is important that you report changes in circumstances, such as changes in your income or family size, to your Health Insurance Marketplace. 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.

For more on job hunting refer to Publication 529, Miscellaneous Deductions on IRS.gov.

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5 Ways to Get Ready for Next Year’s Tax Return

1040 tax returnMost people stop thinking about taxes after they file their tax return. But there’s no better time to start tax planning than right now. And it’s never too early to set up a smart record keeping system.

Here are 5 tips to help you start to plan for this year’s taxes:

  1. Take action when life changes occur. Some life events, like a change in marital status, the birth of a child or buying a home, can change the amount of taxes you owe.When such events occur during the year, you may need to change the amount of tax taken out of your pay. To do that, you must file a new Form W-4, Employee’s Withholding Allowance Certificate, with your employer.

    Use the IRS Withholding Calculator on IRS.gov to help you fill out the form.

    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 family size, to your Health Insurance Marketplace.

  2. Keep your records safe. Put your 2013 tax return and supporting records in a safe place. That way if you ever need to refer to your return, you’ll know where to find it.

    For example, you may need a copy of your return if you apply for a home loan or financial aid. You can also use it as a guide when you do next year’s tax return.

  3. Stay organized. Make sure your family puts tax records in the same place during the year. This will avoid a search for misplaced records come tax time next year.
  4. Choose a competent tax preparer. If you want to hire a tax preparer to help you with tax planning, start your search now. Choose a tax preparer wisely.

    You are responsible for the accuracy of your tax return no matter who prepares it.

    Did you know that many preparers are unlicensed and have no ethical or educational requirements? Employees at chain preparers like H&R Block may only have a few weeks of education.

    CPAs and Enrolled Agents (EA) have strict ethical and continuing education requirements. For example, a CPA is required to take a minimum of 40 hours of continuing education each year just to maintain their license.

  5. Think about itemizing. If you usually claim a standard deduction on your tax return, you may be able to lower your taxes if you itemize deductions instead. A donation to charity could mean some tax savings.

    See the instructions for Schedule A, Itemized Deductions, for a list of deductions.

Remember, a little bit of planning now can pay off big at tax time next year.

If you are worried about your tax return, you can always schedule an appointment with a competent preparer before the end of the year to see where you stand.

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Top Ten Tax Tips if You Sell Your Home

Did you know that if you sell your home and make a profit, the gain may not be taxable?

That’s just one key tax rule that you should know. Here are ten facts to keep in mind if you sell your home this year.

Did You Know:

  1. If you have a capital gain on the sale of your home, you may be able to exclude your gain from tax. This rule may apply if you owned and used it as your main home for at least two out of the five years before the date of sale.
  2. There are exceptions to the ownership and use rules. Some exceptions apply to persons with a disability. Some apply to certain members of the military and certain government and Peace Corps workers. For details see IRS Publication 523, Selling Your Home.
  3. The most gain you can exclude is $250,000. This limit is $500,000 for joint returns. The Net Investment Income Tax will not apply to the excluded gain.
  4. If the gain is not taxable, you may not need to report the sale to the IRS on your tax return.
  5. You must report the sale on your tax return if you can’t exclude all or part of the gain. And you must report the sale if you choose not to claim the exclusion. That’s also true if you get Form 1099-S, Proceeds From Real Estate Transactions.
  6. Generally, you can exclude the gain from the sale of your main home only once every two years.
  7. If you own more than one home, you may only exclude the gain on the sale of your main home. Your main home usually is the home that you live in most of the time.
  8. If you claimed the first-time homebuyer credit when you bought the home, special rules apply to the sale.
  9. If you sell your main home at a loss, you can’t deduct it.
  10. After you sell your home and move, be sure to give your new address to the IRS. You can send the IRS a completed Form 8822, Change of Address, to do this.
Posted in Individual Taxes, Tax Tips | Tagged , , | 1 Comment

How to Write Off Your Vacation Expenses

write off your vacation expensesWriting off your personal vacation expenses is one of those “tricks” that most business owners eventually inquire about. Often, it’s soon after a friend tells them they took a vacation to an exotic location and “wrote it all off”.

It seems too good to be true. But is it?

Here’s the low down on turning your vacation expenses into business tax deductions.
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5 Accounting Best Practices for Small Business

Accounting Best PracticesAccounting doesn’t have to be complex or time-consuming.

For your business to be successful, you know you need accurate and timely financial information. The systems you implement today can mean the difference between surviving cash flow crunches or closing your doors.

As your business grows, you will have even less time to spend on accounting, and without organized systems in place things will quickly spiral out of control.

You will likely pay more in taxes than you need to, or worse, invite an IRS audit.

Don’t let this happen to you. Implement these 5 accounting best practices in your business today.

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Posted in Bookkeeping & Accounting, Business Management, Increasing the Value of Your Business, Professional Development, QuickBooks | Tagged , , , , | Leave a comment