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Back to School on Education Credits – Tax Tip of the Week November 25, 2009

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For the last several years you have had the choice of using the Hope Education Credit, the Lifetime Learning Credit, or the Tuition and Fees Deduction to help defray higher education expenses.tn_education
For 2009, the new American Opportunity Credit will replace the Hope Credit for most taxpayers.  The new credit has several advantages over the Hope Credit:

The rules of the Lifetime Learning Credit and Tuition and Fees Deduction have not changed.  You still need to look at all three education credits when preparing your return to make sure you optimize the best option.

Good luck to the student in your family!

Call us with any questions. In Dayton, call 937-436-3133 and in Xenia, call 937-372-3504. Or visit http://www.bradstreetcpas.com.

…until next week.

Digging into the details of the home buyer tax credit – Tax Tip of the Week November 18, 2009

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houseBy now, you have probably heard that the $8,000 first-time home buyer tax credit has been extended until July 1, 2010. This means you must have a contract in place by April 30, 2010, and the deal must close before July 1, 2010. NOTE: We do not expect this credit to be extended again.

You also probably heard about the new $6,500 tax credit towards a home purchase for those who have lived in their existing homes five out of the last eight years. The new home does not need to cost more than the existing home. The credit is available for purchases from November 6, 2009 through April 30, 2010.

You may not be aware, however, of some of these details:

There are many other rules and scenarios regarding these tax credits.  You strongly encourage you to call us before signing any contracts.

Call us with any questions. In Dayton, call 937-436-3133 and in Xenia, call 937-372-3504. Or visit http://www.bradstreetcpas.com.

…until next week.

Avoid an under-payment penalty – Tax Tip of the Week November 11, 2009

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tn_uncle-sam-taxesIf you owe more than $1,000 on your federal tax return; $500 on your Ohio tax return; or $100 on your city tax return, you will be hit with an under payment penalty.

One way to avoid this penalty is to make sure you pay enough in taxes in 2009 to equal or exceed your 2008 tax liability.  This is called a Safe Harbor estimate.  The taxes can be paid via withholdings, or making an estimated payment.

If you had any changes in your 2009 earnings, you should check your pay stubs and make sure enough will be withheld to avoid penalties.

Call us with any questions. In Dayton, call 937-436-3133 and in Xenia, call 937-372-3504. Or visit http://www.bradstreetcpas.com.

…until next week.

Racking up the Miles – Tax Tip of the Week November 4, 2009

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Track your mileage

Track your mileage to maximize tax deductions

If you use your car or truck in your job or business, and are not reimbursed for the expenses, you probably know you are entitled to take a mileage deduction for the business miles that you drive. You may not be aware, however,  there are other possible mileage deductions as well.

The 2009 Business mileage deduction is 55¢ per mile.

Medical Mileage
A medical mileage deduction is usually a difficult deduction to take because you can only deduct the out-of-pocket medical bills that exceed 7.5% of your income.  If you have the misfortune of having medical expenses this high, it means you probably drove a lot of miles to doctors, hospitals, therapy centers, pharmacies, etc.  The mileage deduction can be added to all of your other expenses. The 2009 Medical mileage deduction is 24¢ per mile.

Moving Mileage
If you move more then 50 miles from your current residence to a new residence because of a job change, and are not reimbursed, you may qualify for a moving expense deduction.  You can add the mileage expense deduction for one trip by each member of the household to the new home.
The 2009 Moving mileage deduction is 24¢ per mile.

Volunteer Mileage
If you use your vehicle in any type of charitable or volunteer capacity, you can add the volunteer mileage deduction to any other charitable cash donations that you may give.
The 2009 Volunteer mileage deduction is 14¢ per mile.

As always, the IRS requires that you be able to substantiate any type of mileage deduction taken.  So keep good records, and be sure you write off as many miles as possible.

We are “driven” to minimizing your tax exposure!

Call us with any questions. In Dayton, call 937-436-3133 and in Xenia, call 937-372-3504. Or visit http://www.bradstreetcpas.com.

…until next week.