Hiring your kids can actually help increase your family’s wealth by decreasing your income tax bill.  The keys to this being successful, however, is that your business must not be incorporated and you pay them reasonable wages.  That will allow you to deduct their wages from your income and shift the money to your children, who will be in a much lower tax bracket.

If your children are under 18, you will have to pay no Social Security or Medicare tax and, usually, no state unemployment or disability taxes either.  The courts have already rules that you can deduct taxes for any “reasonable wages” that you pay your children ages 7 and older to perform for your business.  The key is to show a profit objective though; as long as you can establish a profit objective, you don’t have to actually make a profit to claim the deductions.

Your CPA will strongly advise that you do everything in your power to substantiate every little deduction.  You may want to consider putting your kids on a time clock or writing down their times on a time sheet.  Pay them with a check.  They can always endorse the check over to you for cash.  And finally, make sure that you issue them W-2s at the end of the year.  This will provide them with a copy of what they have earned as well as a copy for the government.  If you need help with setting up any of this or questions concerning the appropriate hiring of your kids, please contact your local accountant.

Since 2003, taxpayers have been able to use the IRS’ “Where’s My Refund?” web page to track down refunds directly from their own computer.  Exactly when you will need to use this service, however, depends on when and how you filed your return as well as how you asked to have your refund issued to you.  If you e-file and ask for direct deposit, the IRS says that it should take no more than 3 weeks to receive your refund.  If you paper filed your return and asked for your check to be mailed to you, it could take up to 8 weeks.

To get started you will need your Social Security number, the filing status entered on your return, and the exact amount you are expecting.  (You can always call your CPA for the exact amount if you don’t recall)  Joint return filers should enter the name and tax ID number of the spouse first shown on the return.  Once you submit, the program should let you know exactly where your refund is.

If you still would prefer to make a phone call though, you can call their special automated toll-free number: (800) 829-1954.  You will need the same information that the online system requires.

With the economy in the state that it is in and Americans seeing a sea of red figures on their investment portfolios, we tend to put our tax management issues on the back burner and focus on the here and now.  That may seem like the best option, but any good CPA will tell you that tax shelters aren’t as important as they were before, they are more important.  The reasons are quite simple:

1) They are sheltered from creditors as well as taxes. Avoiding bankruptcy is always favorable, and having money in shelters will help strengthen your hand if you have to negotiate with lenders at any point.

2) Taxes are likely to rise. Rising taxes will make these shelters much more valuable.

3) Money in tax shelters like IRAs or 401(k)s doesn’t count against you in the federal formula when your children are applying for financial aid for college.  Parents are expected to contribute a certain percentage of their assets to their child’s education, but money in retirement accounts is ultimately invisible to the formula.

With these three things in mind, you should consider speaking to a financial planner about how to invest your income and protect what little you may have left even if you don’t have a lot of extra cash lying around.  Tax shelters will protect your money in the long run.

Your in your 50s and  haven’t saved a dime for retirement, but you have a job – Don’t panic.  You still have time to make up some ground.  It will require you to make significant changes in your lifestyle now, but they certainly won’t be as painful as the changes you would have to make if you continue to put it off.  Any financial planner will tell you that its never too late to start.

You have to start by saving.  And that doesn’t mean just cutting out your daily Starbucks, that means saving, at the very least, 10% of your gross income.  You can do this one of two ways: First, you can pay down high-interest debt that isn’t already tax-deductible – namely credit cards.  Or, you can just start socking funds away.

Make sure to take full advantage of the tax codes (see your CPA or financial adviser) when putting your funds away to maximize your return.  Take full advantage of your company’s 401(k) plan in which contributions are excluded from  your current year’s income.  Investments in such retirement funds grow tax-deferred until they are withdrawn.  If your company does not offer a 401(k), open an individual retirement account at a mutual fund company or brokerage.  If you don’t  have an employer pension plan, you can put away up to $6,000 pre-tax each year.  You can also fund tax-advantaged retirement savings with a second job or side business.  Starting a side business is a good way to maintain income into your retirement as well.  You may be able to put your earnings into a special savings plan for the self-employed.  As for investing your retirement funds, if you are not well versed in the options, you should speak with an experienced financial adviser to help figure out how and where to invest.

The biggest disadvantage you have to starting your retirement savings late is that you lose out on what would have been compounding interest in the previous years.  But even if you are in your 50s, you are still going to be able to take advantage of compounding interest on your investments.  Since retirement is estimated to last upwards of 20 years, your investments will still compound and may even double (at a rate of 5%, investments are estimated to double in 15 years).  So if you you haven’t started saving yet, now is as good a time as any.

The new healthcare reform bill doesn’t mean  a lot to workers who receive employer-sponsored coverage, but for those that buy individual insurance on the open market, it changes a lot.  Six months after enactment, health insurers cannot place lifetime limits on the value of coverage or revoke existing coverage.  Starting in 2014, insurers must accept all applicants, including anyone with preexisting conditions.  Until then, individuals with preexisting conditions who have been uninsured for more than 6 months will be eligible to enroll in a new national high-risk pool and receive subsidized premiums.

Another big change effecting this population is the requirement to be insured or face a monetary penalty.  Early retirees and self employed individuals are going to be able to purchase coverage through state based plans.  Tax credits will be made available to individuals and families with income between 133-400% of the poverty line.  You should speak to your local CPA about these tax credits.

Lastly, if you are 55 years of age and are enrolled in an employer sponsored retiree health plan, your costs may soon be lowered.  Under the government reinsurance program, employers will be reimbursed for 80% of retiree claims between $15,000-$90,000.  The program will end on January 1, 2014.  Speak to your insurance liaison to help pick the most beneficial plan for you.

Many states, including Maryland, offer a “Renter’s Credit” or “Homestead Property Tax Credit” when you do your income taxes.  This credit is typically based on the difference between  your income and property taxes.  You ask how this could possibly work?  As a renter, though, you do not typically pay property taxes directly, but your landlord does, and those taxes are figured into the monthly rent he/she charges.  So, if you make sure that you hang onto any receipts showing you paid your rent so you can provide documentation if the IRS requests it.  Keep copies of your cancelled checks or ask for receipts from your landlord every month.

When filing for this tax credit, however, it is a good idea to consult with a CPA in Rockville to verify if you do in fact qualify and how much of a deduction you can take.  It can be a bit confusing.

CPA Rockville – Looking for employment can become very expensive.  From printing resumes and hiring job coaches, to flying to interviews, its all money out of your pocket.  You practically need a job to afford to look for one.

Not every workplace hopeful qualifies for these deductions though.  You are only eligible if you’re seeking a job in your present field of work, you aren’t looking for your first job, and you aren’t entering the job market after a “substantial” period of unemployment.  (You may need to speak to a tax adviser in Rockville as the IRS’s definition of “substantial” is considered a gray area in the tax code)

To claim job search expenses, you just need to itemize them on your tax return.  If you travel across the country for an interview, you can write off the plane ticket or gas costs.  If you have a phone interview, you can deduct the cost of the call.  If you decide to place advertisements or hire a head hunter to assist in your search for employment, each of these items, including the copies you make of your resume, are allowable deductions.  The general rule of thumb when determining these deductions is that if what you buy can be used for other purposes, you can’t deduct it as a job search expense.  What qualifies as a deduction, however, can still be a much more complicated process, so its always a good idea to go to a tax expert in Rockville, Maryland with any questions.

CPA Rockville – High-income households will be paying more into Medicare as a result of the reform package.  What we do know for certain is that the Medicare payroll tax is going up for individuals making more than $200,000 in wages, and couples making more than $250,000.

Currently, the Medicare payroll tax is 2.9% on all wages, with the worker and his employer splitting the cost (1.45% each).  Under the new law, to begin in 2013, high-income individuals will pay an additional .9% points, making the workers share 2.35%.

In addition to this increase, if the reconciliation bill that passed the House Sunday is approved by the Senate, high-income households would also be subject to a new 3.8% Medicare tax on investment income starting in 2013.  This includes capital gains, dividends, interest, annuities, royalties, and rents.  Any investment income that had previously been characterized as “tax exempt”, however, would not be subject to the new tax.

Not all investment income may be taxable due to how the proposal is structured though.  Seeking advice from your financial adviser in Rockville, MD or certified public accountant (CPA) may help to prepare you for these upcoming changes.

CPA Rockville – The first-time home buyer tax credit applies to individuals or couples who have purchased a new home after April 8, 2008 and before May 1, 2010.  There are a few different versions of the credit depending on when the home was purchased:  the first, for homes purchased in 2008, the credit, with some exceptions, must be repaid and takes the form of a $7,500 interest-free loan; the second, for homes purchased in 2009 prior to November 7, the credit is for a maximum of $8,000 and, with some exceptions, does not have to be repaid, but its only for new homeowners that have not owned a primary residence in the previous 3 years; and finally, beginning November 7, 2009, an additional category of new home buyers, long term residents was added.  The credit for this group is a maximum of $6,500, which, with some exceptions, does not have to be repaid.

The credit is for 10 percent of the purchase price of the home, with a maximum available credit of $7,500 (or $8,000 depending on the purchase date) for either a single taxpayer or a married couple filing a joint return, but only half of that amount for married persons filing separate returns.  Any home purchased as your primary residence and located within the United States qualifies.

This credit is not applicable for higher-income taxpayers.  For purchases on or before November 6, 2009, the phase out range for single taxpayers based on the modified adjusted gross income (MAGI) is $75,000; and for married couples is $150,000.  For purchases after November 6, 2009, single taxpayers MAGI must be less than $125,000 and married, joint filers must be less than $225,000.

Contacting your local, experienced CPA in Rockville may make filing this credit much less of a headache and prevent having to file any amendments later.  Since very specific documentation is required by the government for this credit, the return must be mailed in as a hard copy.  Consult your trusted tax specialist if you have any questions.

CPA Rockville – Want your tax refund faster?  File your federal return online and have the refund direct deposited into your bank account.  The Internal Revenue Service has promised to get refunds out to those who electronically file their taxes online in as few as 10 days.  For those who choose to mail their return in, refunds are expected to take four to six weeks.

For those filers taking advantage of the expanded home buyer tax credits, however, paper forms must still be filed because Congress has required documentation to claim them.  Under the program, buyers who have owned their current homes at least five years would be eligible, subject to income limits, for tax credits of up to $6,500.  First time home buyers or people who haven’t owned homes in the previous three years could receive up to $8,000.

Taxpayers can file their returns electronically whether they use a paid tax preparer/CPA in Rockville, Maryland or do it themselves.  For families and individuals making less than $57,000, the IRS offers Free File computer software programs that help taxpayers prepare their returns at no charge.  Those making more than $57,000 can still file their returns online at no cost, they just won’t get the additional free help.