Having a New Baby? These Tax Tips Are Essential

Get A Social Security Number. Obtain a Social Security number for your new addition prior to filing your tax return. To fail to do so not only delays your tax filing, you can also be subject to a $50 penalty. So get this process started right away to avoid unneeded delays at the end of the year.

Put these tax benefits on your radar too. When recalculating your withholdings also account for common tax benefits that come with new dependents. The most common of these benefits includes the Earned Income Credit and the $2,000 Child Tax Credit.

Think funding. It is never too early to start building your little one’s net worth. You can provide gifts of up to $15,000 ($30,000 for married couple) each year in a savings or investment account. This strategy helps take advantage of the kiddie tax exemption for up to $2,100 of unearned income in your child’s name.

Dependent care help. There is also a Dependent Care Tax Credit for those who put their child in a qualified daycare while they work. First check for a pre-tax benefit of up to $5,000 from your employer as part of your employee benefit package. Even if it is not available through work, you can qualify for the credit by using your direct payments to the qualified daycare.

Consider their education. 529 College savings plans and other tax beneficial educational savings plans are worth considering. Virtually any relative or other adult can start saving tax-free money in your new child’s name. With the ever-higher cost of a college education this benefit is worth beginning as soon as possible.

New filing status? If you are married with a new addition, your filing status remains the same. However, if you are single with a new birth your filing status could be more beneficial to you if you qualify as a Head of Household filer.

Per the tax code, your new bundle of joy provides some joy to your tax situation as well.

If you’d like to learn more about deductions and tax planning for your family, scheduling a meeting with our team today: https://www.bas-pc.com/appointment-center/

Visit us on my Website : BAS – Business Accounting Systems – New Jersey and Philadelphia Accounting

Thanks for reading this blog. You can subscribe for regular update about technology news and tips via RSS Feed. you can also follow us on facebook & twitter.Thanks for visiting!.

Nine Basic Rules of Building a Nest Egg

Building a nest egg to give you a secure financial future doesn’t require a degree in economics, just a degree of common sense. The rules are easy and time-tested, and the smart players always abide by them.

1. It’s never too late or too early to start. Think back five or ten years and say to yourself, “Where would I be now if I had started saving a little each month back then?”

2. Get out of debt. Payments on certain things such as a home or a car may be necessary, but pay off the charge cards. That alone is a sound investment with a return equal to the interest credit card companies charge you.

3. Establish a budget, a realistic one that accounts for everything, including the big financial drains like taxes, vacations, and holiday spending. While you’re drawing up a budget, streamline your finances. Don’t buy things that give you nothing in return. Don’t splurge; think about what you’re buying. Be sure you are properly insured with the right types and amounts of insurance.

4. Set aside an emergency fund, enough to live on for three to six months. Consider building your emergency fund in a low-risk investment that’s easily converted to cash, such as a no-load mutual fund or a savings account.

5. Invest safely and simply. Be cautious with your investments until you have built a portfolio and have some knowledge of how the financial world operates. Your first investments might be CDs, mutual funds, or savings bonds.

6. Stick with your plan. Investing a fixed amount every month without fail is far wiser than waiting for a windfall from interest rate changes or a stock market jump. Inform yourself with
periodicals, books, and television financial programs. Monitor your plan and gently steer it in a new direction if necessary.

7. Diversify. Remember to diversify even within the broader markets. A mutual fund may provide a range of stocks, but you should diversify further by investing in different types of mutual funds and in different “families.”

8. Include your spouse in planning sessions, or your spouse may live a nightmare trying to unravel your financial affairs if something happens to you. Also, input from a spouse gives fresh perspective for establishing realistic financial goals for the entire family.

9. Have patience.You do not create financial security in a few months; you achieve it over many years. Seek professional assistance when you are in unfamiliar territory.

If you would like help with financial planning, don’t hesitate to contact our team of experts. We’re here to help. Schedule time today: https://www.bas-pc.com/appointment-center/

Visit us on my Website : BAS – Business Accounting Systems – New Jersey and Philadelphia Accounting

Thanks for reading this blog. You can subscribe for regular update about technology news and tips via RSS Feed. you can also follow us on facebook& twitter.Thanks for visiting!.

Do You Qualify for a Home Office Deduction?

Your home. Your office. Are they one and the same? If so, you may be able to take a home-office deduction that can save income and self-employment taxes.

The deduction gives you the opportunity to claim expenses related to the business use of your home, such as utilities, repairs, and insurance. Meet the requirements, and you’re eligible whether you rent or own your home.

Taxpayers who qualify may use a simplified deduction calculated at $5 a square foot for up to 300 square feet of an area in a home that is used regularly and exclusively for business. The deduction is capped at $1,500 a year.

Here are two questions that can help you decide if you qualify for a home-office deduction.

Do you pass the regular and exclusive business use test? The rules say you have to use your home office on a continuing basis, and that it has to be dedicated to your business.

While you’re not required to have a separate room, personal or family use of your work area means no deduction.

What business activities do you conduct in your office? Meeting customers or clients in your home office qualifies as business use.

Taking care of management and administrative tasks such as writing reports and billing clients also qualifies, as long as you don’t have another office that you use primarily for the same activities.

If your office is separate from your home and you meet the regular and exclusive business use test, you can deduct related business expenses -even if you don’t meet clients or perform management activities there.

Special rules apply to work-at-home employees and daycare facilities. In addition, exceptions apply when you use your home for storing inventory or product samples. Please schedule time with our team if you would like more information: https://www.bas-pc.com/appointment-center/

Visit us on my Website : BAS – Business Accounting Systems – New Jersey and Philadelphia Accounting

Thanks for reading this blog. You can subscribe for regular update about technology news and tips via RSS Feed. you can also follow us on facebook& twitter.Thanks for visiting!.

Cut Taxes With Lifetime Giving

If you want certain individuals to receive property from your estate, there may be advantages to making those gifts while you are still alive.

Consider these facts about making lifetime gifts:

Gifts to spouses. The tax law permits a married individual to make gifts of any amount to a spouse without incurring any gift tax. The value of these gifts is not includable in the estate of the donor.

Annual gift exclusion. To individuals other than your spouse, in 2019 you can transfer $15,000 per year ($15,000 in 2018), per recipient, without incurring gift tax.

If you’re married and your spouse joins in the giving, you can transfer double that amount annually to each recipient (even if the gifted property is owned by only one spouse).

A consistent program of gifts under the annual exclusion rules can create substantial estate tax savings.

Example: You have two married children and four grandchildren. Each year, you make eight gifts equal to the annual exclusion amount. You will pay no gift tax and use none of your unified estate and gift tax credit.

No tax deduction for gifts. Note that gifts to individuals do not entitle you to an income tax deduction. A gift to an individual isn’t a charitable contribution. Conversely, a gift doesn’t constitute taxable income to the recipient. Gifts of income-producing property may, however, reduce your taxable income. Once you’ve given the property away, the recipient, not you, receives the income it produces and pays any income tax due on it.

Flexibility in giving. One advantage to annual gift giving is that it is relatively simple to do, especially if you’re giving away cash. Another advantage is flexibility; you can see how much you can afford to give away each year. You can give away anything –cash, stock, art, real estate. Valuation is the fair market value on the date of the gift. Subsequent appreciation, if any, belongs to the donee, not you.

Don’t be hasty. Before you give away assets, be sure you will not need them yourself to provide income in later years. Consider the impact inflation will have on your resources.

All gifts count. All gifts during the year, including birthday and holiday presents, count toward the annual gift tax exclusion. If the total exceeds the exclusion, a gift tax return is required.

Year-end gifts. A gift made by check isn’t complete until the recipient actually deposits or cashes the check. Plan accordingly when making year-end gifts, especially if you want such gifts to be counted toward the current year’s gift tax exclusion.

Visit us on my Website : BAS – Business Accounting Systems – New Jersey and Philadelphia Accounting

Thanks for reading this blog. You can subscribe for regular update about technology news and tips via RSS Feed. you can also follow us on facebook& twitter.Thanks for visiting!.