How to Qualify for the EITC

The EITC is a tax credit that is designed for workers who only make a small amount of money throughout the year. The credit amount is based off your annual income and the status you file.

How to Qualify

Some criteria have to be met for taxpayers to qualify for the EITC.

• You and your qualifying child have to have a social security number
• You cannot file married filing separately
• Your investment income cannot be more than $3,300.
• You have to be a U.S. citizen
• Your earned income must come from employment or self-employment.

For Those Who Are Not Required to File

Under the IRS guidelines, some individuals are not required to file. Nevertheless, if you want to be able to take advantage of the EITC you have to file.

Read “How Retirement Income Is Taxed”on our Yakima Bookkeepers blog!

 

For Those Who Do Not Work

In some instances, those who do not work are still able to claim the EITC. For example, some people who receive disability benefits are eligible for the tax credit. However, those who receive unemployment income are not eligible for this tax credit.

For Those without Children or Dependents

The credit will be higher for those who have children/dependents however; those without, can still qualify.

Closing Thoughts

The EITC is for those who have low to moderate incomes. If you try to deceive the IRS to get the credit and they catch you, expect to pay them back the money they gave you in addition to losing your ability to claim the credit down the line.

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How to Check the Status of Your Tax Refund

After you file your taxes, you can check the status of your tax refund. Today, we are going to discuss how to check the status of your tax refund.
Where’s My Refund Tool
The Where’s My Refund Tool available on the IRS website is one of the fastest and easiest ways for you to check on your refund. It is available 24/7/365 for your use. You can track your refund as soon as 72 hours after the IRS acknowledges that they have received your federal tax return. You will have to have your social security number, filing status, and the refund amount available to check your refund status. The tool will tell you when you can expect your refund to be mailed or deposited into your bank account.
Call the Toll Free Number
If you want to check the status of your refund over the phone, you should call 800-829-1954. You are going to need your social security number, filing status and the amount of your refund to access the information desired.
Smartphone App
If you have a smartphone, you can use the IRS smartphone app, IRS2GO, to check the status of your tax refund. It is available for Apple and Android users at this time in the Apple App Store and the Android Marketplace.
Bottom Line
There are three ways for you to check the status of your federal tax refund. You are able to choose which method works the best for you. Good luck on tracking down the status of your refund!

Tax Deductions for Small Businesses

If you run a small business, you can save money during tax time with the various deductions available. Therefore, today we are discussing some of the top tax deductions for small businesses.
Bad Debts
If you provide a customer with an item and they do not pay for it by the end of the year you are able to write off the amount that they owe you as a bad debt when tax time rolls around.
Entertainment
If you have to pick up the tab for a client, you can deduct 50% of the bill. However, this does not mean that you should be spending hundreds of dollars on clients and calling it a business expense. You want to make sure that the entertainment that you provide to clients is actually of a “business nature” such as a business dinner.
Interest
If you finance your business with credit, all of the interest that occurs is tax deductible. The same thing goes for personal loans that are used for your business. However, you will want to make sure that you keep good records so if the need arises you can prove that the money was spent on your business.
Advertising
All of the money that you spend on advertisements for your business can be written off during tax time. However, there has to be a clear connection that all advertisements are for your business.
Bottom Line
As a small business owner, there are numerous deductions that you can make. However, you have to make sure that you have proof available in case the IRS requests to see it.

Tax Deduction Tips: Independent Contractors vs. Employees

Independent Contractors vs. Employees
Tax season is something some look forward to while others wish they could find a way to avoid it. Some end up paying money while others get money back. When it comes to contractors and employees, they differ in a ton of different ways and the same thing goes when tax season rolls in. Today we will be discussing the difference in tax deduction tips for contractors and employees.

Independent Contractors
Contractors are self-employed individuals who are in control of their work and income. Contractors differ from employees because they have to pay both halves of their Social Security and Medicare taxes, instead of splitting it with employers. However, the good news is, they are able to claim several tax deductions that can minimize how much they pay the government in taxes.

Popular Tax Deductions for Independent Contractors

  • Home Office
  • Moving Expenses
  • Meals and Entertaining Expenses
  • Commuting Expenses
  • Medical Insurance Expenses
  • Retirement Plans

Employees
Employees get the benefit of having their Medicare and Social Security taxes split in half, with their employer paying half of the taxes. However, even though this takes place, like contractors, they also have deductions that they can take, which generally helps them get a refund or reduce the amount of taxes that they owe the IRS.

Popular Tax Deductions for Employees

  • Commuting Expenses
  • Work Expenses not covered by employers
  • Travel and auto expenses
  • Job search expenses
  • Passport

Bottom Line
If you want to keep more of your hard-earned money in your pocket, regardless of if you are a contractor or employee, it is ideal to take advantage of as many tax deductions as possible.

Why You Won’t Get Audited

bigstock_Audit_Checklist_4843115How to Lower Your Audit Risk
When filing taxes, some individuals are afraid that they will be audited. While there is no way that you can be 100% sure, that your return will not be audited there are ways to lower your risk. Therefore, today we will discuss things to do that will ensure you won’t get audited …
Prepare Your Taxes on a Computer
We never suggest handwriting your taxes. Instead, prepare them on your computer so they look neat and official. The IRS loves computer prepared returns and it benefits you by allowing you to double check that your return is complete and accurate. When you hand write your return it may come out looking sloppy and messy, which is telling the IRS to audit you because you are careless and not organized.
Never Round Your Numbers
Your tax return needs to be as accurate as possible. If all of your numbers are rounded, the IRS will suspect that you do not have records to back up the numbers. You should never estimate. If a calculation is $591, this is what you want to input, instead of rounding to $600.
Attach Proof to Your Tax Return
If you claim uncommon deductions, be sure to attach documents to back them up. You can show repair receipts, pictures, etc. This will not stop unusual deductions from being flagged in the system yet if you have the proof readily available, you may have just avoided an audit.
Go To a Professional and Have Your Taxes Filed
If your tax situation is complex, it is in your best interest to seek out the help of a professional. Usually, they will have audit protection included with their services, so if you are audited you will have someone to help you out. However, when seeking professional tax preparation help, you have to make sure that you are honest. If they file your taxes and you are audited for something you lied about, they will not be able to help you.
Conclusion
Auditing is not something that you have to worry about if you file your taxes correctly. Outside of filing your returns ourselves, we cannot provide you with a guarantee that you will not be audited. The tips that we have listed above will almost certainly lower your chance of being audited.

Quickbooks Overview and Our Tacoma Contact

“In this Webcast, Seattle CPA & QuickBooks ProAdvisor Jessica Chisholm will fill you in on a few QuickBooks user essentials. The object will be to improve your ability to navigate QuickBooks in a more efficient manner and increase your understanding of the accounting software. This video course will show you how to properly record deposits, make journal entries, and give you other tips so you can be sure you are getting the maximum benefit that the accounting software can provide. This is a webinar to help you so that come tax time your books are in excellent order for quick preparation of your tax return.”

If you’re interested in viewing more than the opening clip, we have all of our prerecorded events available at our Youtube page or through our Small Business Webcast events page. If you’re curious about what Small Business Webcast is, it is a site where professionals, who are leaders in their various fields, have the opportunity to provide continuing education to small business owners and other professionals in a wide array of fields. This education takes place through free webinars. This site also provides small business owners increased marketing exposure and networking opportunities. Once registered, anyone can establish a free profile for their business. The site also includes capability for commenting, blogging, photo and video sharing.

The previous webcast includes information on Quickbooks and the ways it can benefit your business. It is also an overview of the bookkeeping, payroll and Quickbooks services we offer our clients. For our Quickbooks Proadvisor in the Tacoma area, use our reference Brenda Ellis, a QuickBooks Advanced Certified ProAdvisor. You can email her at brenda@ellisbookkeeping.com or call her at 253-271-8291.

We Offer Great Services to Small Businesses!

“7 Tax Tips for the Self-Employed” is a great webcast for small business owners and freelancers. We discuss everything from entity selection to how to manage your business to avoid an audit and some valuable tax deductions.

More webcasts like this are available through our excellent and comprehensive resource for small business owners at Small Business Webcast.

If you’re interested in learning a bit more about Small Business Webcast we’ve highlighted some of the features the site offers:

Our forum is a great place to introduce yourself and your business to all of the members. Here you can network with others, pose questions, or share your own thoughts on business related topics. Often times our own peers have equally valuable knowledge as our mentors.

As previously mentioned, the webcast events are one of our most powerful and informative tools. Feel free to sign-up for any of the topics that may be of interest to you in order to gain substantial knowledge provided by experts.

Refer to our articles page for some readings related to small business. Here you will find additional information on taxes, entity selection and effective marketing approaches. Have some advice for small business owners? Write an article. Click “Quick Add” on the right. Then click Blog Post.

For a more personalized experience, edit your profile information to include a link to your business website along with a profile picture so fellow members are encouraged to engage with you.

Don’t forget to “like” us on Facebook (located in the sidebar of the homepage) in order to receive updated information about upcoming webcasts and future events.

We look forward to having you as a member!

If you’re looking for a Bellevue CPA or a highly skilled and knowledgeable CPA firm throughout the greater Seattle area, take a look at some of our services!