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Tax Tip of the Week | No. 300 | A Third Look at MFJ vs. MFS April 29, 2015

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Tax Tip of the Week | April 29, 2015 | No. 300 | A Third Look at MFJ vs. MFS

How you file in Ohio

The last couple of weeks we have looked at Married Filing Joint (MFJ) vs. Married Filing Separate (MFS).  This week we see how you need to file these in Ohio.

Unfortunately, if you file a MFJ federal return you must file a MFJ return with Ohio. If you file MFS federal returns then you must file MFS returns with Ohio.  This is unfortunate because typically, the tax saving from filing MFS comes from the Ohio taxes saved.  There are a few states that allow separate federal and state filing statuses.

The rules differ, however, if you are a same-sex couple.  Last year, it was determined that if a same-sex couple was married in a state that recognizes such a marriage then they had to file either a MFJ or MFS federal return. Since Ohio does not recognize same-sex marriages, each couple must then file returns with Ohio as a “Single” filer if required to file an Ohio tax return.

It helps to know the rules before you even start to file your tax returns!
You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

Tax Tip of the Week | No. 299 | IRS to Hold Returns with the American Opportunity Tax Credit April 22, 2015

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Tax Tip of the Week | April 22, 2015 | No. 299 | IRS to Hold Refunds on Returns with the American Opportunity Tax Credit

If you qualify for the American Opportunity Credit (AOTC) this year, please be aware of a possible “refund hold” on the credit to verify attendance.

The AOTC is available to eligible students for up to four years of qualified higher education expenses.

The AOTC is a “refundable” credit; if the credit exceeds the tax computed, the IRS will pay you the excess. Given the high incidence of refund fraud involving refundable credits like the AOTC, it’s understandable that the IRS would want to verify eligibility before issuing a refund.

Colleges and universities have two ways of reporting information on Form 1098-T: 1) Amounts billed, 2) Amounts paid. Generally, online reporting systems at colleges and universities only provide amounts billed. Amounts billed often times are paid, but that information may not be fully disclosed on Form 1098-T. This year, for the 2015 tax season, the IRS is implementing a hold on refunds on returns with American Opportunity Tax Credits until the 201519 cycle (mid-May) until attendance is verified.

If refunds are held, the IRS will inform the taxpayer of the reason through letter 4800C to determine if further documentation is required.

This year, more than ever, be sure to keep records of the actual expenses you pay for higher education tuition and fees, books, supplies and equipment.

Let us know if you have any questions.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

Tax Tip of the Week | No. 298 | Thank You! April 15, 2015

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Tax Tip of the Week | April 15, 2015 | No. 298 | Thank You!

The Week After Tax Season

Aaaah……The week after tax season (and the first full weekend home in two and half months) is the best week in a tax accountant’s life!

We met a lot of new clients this year because of referrals from existing clients, and readers of our Tax Tip of the Week. Thank you!  A referral is the best compliment we can ever receive.

Even though tax season is over—we will continue our Tax Tip of the Week mailing for the rest of the year. We will keep you updated on the constant changes, as well as spotlighting specific tax planning ideas.

If there are any special tax topics you would like us to cover, just send us an email or give us a call.

Again, thank you for making this one of the most rewarding tax seasons yet.

As always, give us a call if you have any questions.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

Tax Tip of the Week | No. 297 | It Is Better to Extend vs. Not Filing on Time April 8, 2015

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Tax Tip of the Week | April 8, 2015 | No. 297 | It Is Better to Extend vs. Not Filing on Time

Filing for Extensions

If you haven’t filed your tax return by now, you should probably consider filing for an extension.  It is a lot easier to file for an extension than it is to amend a return later for a mistake you made trying to rush your return to completion.  Even more costly is if the IRS finds a mistake you made, they will assess underpayment penalties and interest.

To file for an extension, you simply need to submit Form 4868. (http://www.irs.gov/pub/irs-pdf/f4868.pdf) After submitting this form, you now have until October 15, 2015 to timely file your return.  Note, however, an extension of time to file is not an extension of time to pay.  If you suspect you will owe some taxes, you must send a payment along with the extension.  This is true for your federal, state and city returns.

Ohio will automatically accept the federal extension. Some cities, however, require a special city extension form.  Also, some cities will not allow extensions if you only have W2 income.  Be sure to check with your work and/or resident cities before April 15th.

Another reason to file for extension is that some speculate your chances for an audit decreases for extended returns.  How?  One of the methods the IRS uses to select a return for audit is to select a random sample of returns filed by April 15th.   If your return is not in that sample—then you don’t get picked!

Editor’s Note:  One of the pledges I make to all my clients is that my personal return will be the last one filed each year. When my most procrastinating client’s return is filed on October 15th —-mine is right behind it!  And has been that way for nearly 20 years!

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.
Rick Prewitt – the guy behind TTW

…until next week.

Tax Tip of the Week | No. 296 | No More Double Dipping in Ohio April 1, 2015

Posted by bradstreetblogger in : tax changes, Tax Tip, Taxes, Taxes, Uncategorized , add a comment

Tax Tip of the Week | April 1, 2015 | No. 296 | No More Double Dipping in Ohio

A change in Ohio tax laws

Beginning with the 2014 filing year, dependents will no longer be able to claim a personal exemption, if another taxpayer claims them on their return.

This primarily impacts high school and college age students with part-time jobs, who are claimed on their parent’s tax returns.

Such a student with a part-time job could never claim themselves on their federal tax return, if claimed by the parents.  However, up until now, Ohio allowed such “double dipping.” Usually when we filed a dependent return for our clients, the student would almost always get back all of their Ohio tax withholdings. We didn’t see that as often this tax season.

Ohio also introduced Schedule J for the 2014 filing season.  This form was created to capture information on dependents being claimed on Ohio tax returns.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.
Rick Prewitt – the guy behind TTW

…until next week.