Year end planning will be more challenging than normal this year. Due to the passage of the American Taxpayer Relief Act of 2012 (ATRA) and the provisions of the Patient Protection and Affordable Care Act of 2010 which are scheduled to take effect in 2013 and 2014 individuals will see higher tax rates across the board and a number of popular deductions and credits will be gone. Estate and gift tax rates will be higher as well. Careful tax planning can save you substantial dollars otherwise paid to Uncle Sam. Therefore, tax planning actions taken between now and the end of the year may be more important than ever.
We are probably most aware of children being tax benefits…qualifying us for exemptions, head of household status and earned income credits. But having the IRS consider a person as your child can also have its disadvantages, as when his or her investment income must be taxed at your, higher, tax rate. Thus it is important to know the IRS cut-off points, which are not at all consistent.
Declaring taxes is one of the most important tasks that all individuals and businesses have to deal with every year. Filing taxes can be complicated, especially if you have no experience or if you own a business. That’s why it is important for each individual or business owner to have an accountant or a local CPA in Los Angeles that they can trust.
First let’s understand the difference between an accountant and a CPA. An accountant is the individual who earned a bachelor’s degree in accounting from a 4 year college or university. An accountant helps maintain and analyze financial records and assure that taxes are paid on time and correctly.
Whether you are a first year tax return filer or have been paying US Income taxes for years you should always remember to ask your accountant whether or not he itemized your expenses last year. This is very important and here is why:
If you are in a position to itemize your deductions on schedule A of your tax return in lieu of claiming the standard deduction, then you may be able to take advantage of claiming certain miscellaneous deductions. These deductions reduce the amount of your taxable income and reduce the amount of taxes you may have to pay.
Can I still claim dependent care credit on my US individual tax form 1040, even if I use a Flex plan for Child care costs?
Los Angeles Tax Expert Answers:
Yes… You can claim the dependent care credit!!
You can still claim the dependent care credit if you use a flex plan for child care costs:
The credit can be claimed on the United States taxpayer’s second page of their form 1040. The amount is calculated on form 2441 “Child and Dependent Care Expenses”. You can claim credit to the extent your expenses are more than the amount that you pay through your flexible spending account.