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The biggest compliment I could ever receive is a referral. Nothing shows more satisfaction in services than taking time to share your experience at JAG CPA LLC with your friends and family. To prove how much I value you sharing your experience, I will pay you 10% of the first year's invoice that I collect from your referrals. That includes, personal or business tax returns, accounting & bookkeeping services, payroll, or general business services. Please tell your friends that JAG CPA LLC can meet all of your personal or business tax and accounting needs.

Jonathan A Giegerich, CPA
Owner

EDUCATIONAL TAX RELIEF

Navigate Educational Tax Credits This Year!


I f you, your spouse or a dependent are heading off to college in the fall, some of your costs may save you money at tax time. You may be able to claim a tax credit on your federal tax return. Here are some key IRS tips that you should know about educational tax credits:   


  • American Opportunity Tax Credit.  The AOTC is worth up to $2,500 per year for an eligible student. You may claim this credit only for the first four years of higher education. Forty percent of the AOTC is refundable. That means if you are eligible, you can get up to $1,000 of the credit as a refund, even if you do not owe any taxes.
  • Lifetime Learning Credit.  The LLC is worth up to $2,000 on your tax return. There is no limit on the number of years that you can claim the LLC for an eligible student.
  • One credit per student.  You can claim only one type of education credit per student on your tax return each year. If more than one student qualifies for a credit in the same year, you can claim a different credit for each student. For instance, you can claim the AOTC for one student, and claim the LLC for the other.
  • Qualified expenses.  You may use qualified expenses to figure your credit. These include the costs you pay for tuition, fees and other related expenses for an eligible student. Other expenses, such as room and board, are not qualified expenses.
  • Eligible educational institutions.  Eligible schools are those that offer education beyond high school. This includes most colleges and universities. Vocational schools or other postsecondary schools may also qualify. If you are not sure if your school is eligible:
    • Ask your school if it is an eligible educational institution, or
    • See if your school is on the U.S. Department of Education's Accreditation database.
  • Form 1098-T.  In most cases, you should receive Form 1098-T, Tuition Statement, from your school by Feb. 1, 2016. This form reports your qualified expenses to the IRS and to you. The amounts shown on the form may be different than the amounts you actually paid. That might happen because some of your related costs may not appear on the form. For instance, the cost of your textbooks may not appear on the form. However, you still may be able to include those costs when you figure your credit. Don't forget that you can only claim an education credit for the qualified expenses that you paid in that same tax year.
  • Income limits. These credits are subject to income limitations and may be reduced or eliminated, based on your income.
There are also a variety of other education-related tax benefits that can help many taxpayers. They include:
  • Scholarship and fellowship grants - generally tax-free if used to pay for tuition, required enrollment fees, books and other course materials, but taxable if used for room, board, research, travel or other expenses.
  • Student loan interest deduction of up to $2,500 per year.
  • Savings bonds used to pay for college - though income limits apply, interest is usually tax-free if bonds were purchased after 1989 by a taxpayer who, at time of purchase, was at least 24 years old.
  • Qualified tuition programs, also called 529 plans, used by many families to prepay or save for a child's college education.
If you are unsure if you qualify or if you would like more information, visit my website and contact me. 


SHOULD YOU INCORPORATE YOUR BUSINESS?
One of the first decisions you face as a new business owner is whether or not to incorporate your business. The biggest advantage of incorporating is limitation of your liability. Your responsibility for debts and other liabilities incurred by a corporation is generally limited to the assets of the business. Your personal assets are usually not at risk, although there can be exceptions to this general rule. The trade-off is that there is a cost to incorporate and, in some cases, tax consequences.

Are you already incorporated but are not sure how that affects your taxes? Have you filed your taxes for years and never known that there are several different ways for a business to file its taxes?  Schedule a free business consultation for help in selecting the legal entity that is best for your business.
 
POSTPONE TAXES WITH THIS STRATEGY
Trade Assets In A Tax Free Transaction!

The tax law provides a valuable tax-saving opportunity to business owners and real estate investors who want to sell property and acquire similar property at about the same time. This tax break is known as a like-kind or tax-deferred exchange. By following certain rules, you can postpone some or all of the tax that would otherwise be due when you sell property at a gain.

A like-kind exchange simply involves swapping assets that are similar in nature. For example, you can trade an old business vehicle for a new one, or you can swap land for a strip mall. However, you can't swap your vehicle for an apartment building because the properties are not similar. Certain types of assets don't qualify for a tax-deferred exchange, including inventory, accounts receivable, stocks and bonds, and your personal residence.
Typically, an equal swap is rare; some amount of cash or debt must change hands between two parties to complete an exchange. Cash or other dissimilar property received in an exchange may be taxable.

It is not necessary for the exchange of properties to be simultaneous. However, in the case of such a delayed exchange, the replacement property must be specifically identified in writing within 45 days and must be received within 180 days (or by your tax return due date, if earlier), after sale of the exchange property.

With a real estate exchange, it is unusual to find two parties whose properties are suitable to each other. This isn't a problem because the rules allow for three-party exchanges. Three-party exchanges require the use of an intermediary. The intermediary coordinates the paperwork and holds your sale proceeds until you find a replacement property. Then he forwards the money to your closing agent to complete the exchange.

When done properly, exchanges let you trade up in value without owing tax on a sale. There's no limit on the number of times you can exchange property. If you would like to learn more about tax-deferred exchanges, contact us.


Visit my website and email me with questions!


Taxes are becoming more and more complex. If you have a special tax situation and would like to know more about your options as a taxpayer, please call me and schedule a free consultation appointment.

Sincerely,


Jonathan A Giegerich, MST, CPA
JAG CPA LLC  
JAG CPA LLC

 


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