American Opportunity Credit for Education

The American Opportunity Credit is for education expenses of an eligible student who is a taxpayer, spouse or dependent(s). The maximum credit amount is $2,500 per eligible student. 100% of the first $2,000 of qualified education expenses 25% of the next $2,000 of qualified education expenses Qualified expenses are tuition, fees, and course materials required for enrollment or attendance at an eligible educational institution.    An eligible educational institution is any college, university, vocational school, or any other post secondary educational institution.  They include almost all accredited post secondary schools.  Qualified expenses also include student activity fees if the fees must be paid as a condition of enrollment, books, supplies, and equipment needed for a course of study. An eligible student is as follows: Student has not already claimed the American Opportunity Credit in at least four prior tax years. Student has not completed the first four years of post secondary undergraduate education before the tax year as determined by the educational institution. For at least one academic period beginning during the tax year, the student was enrolled at least half time in a program leading to a degree, certificate, or other recognized educational credential. The student had no federal or state felony conviction for possessing or distributing a controlled substance as of the end of the tax year. The American Opportunity Credit also has restrictions as follows: Income limit for 2015 is modified AGI between $80,000 and $90,000($160,000 and $180,000 MFJ).  These amounts are adjusted for inflation each year. No credit is allowed if: Filing status is Married Filing Separately Taxpayer is claimed as a dependent on another...

Section 179 Depreciation Deduction

Starting in year 2015, the Section 179 deduction limit in now permanent at $500,000 with the investment limit at $2,000,000 and indexed for inflation.  If the total cost of Section 179 property exceeds the investment limit, the available Section 179 deduction is reduced by the amount of the excess (but not below zero).  Amounts disallowed because of the investment limit may not be carried over.  However, if the business income limit prevents a business from deducting all or part of the cost of Section 179 property, the disallowed amount is carried over to the next tax year. Off-the-shelf software eligible for Section 179 is also now permanent. A Section 179 deduction made may be revoked or modified without IRS approval by filing an amended tax return.  Once revoked, the election cannot be reinstated. Carryover of Section 179 attributable to qualified real property provision is now permanent. If you would like to learn more about this tax strategy, please call Susan at...

2016 Health Insurance for S Corporation Owners

Deducting health insurance is a 3 step process for the more than 2% S corporation employee-shareholder.   However, before discussing the 3 step process, the health insurance plan for the more than 2% S corporation employee-shareholder must be established by one of the following:ᵃ The S corporation makes the premium payments for the health insurance policy covering the more than 2% employee-shareholder (and his/her spouse or dependents, if applicable). The more than 2% employee-shareholder makes the premium payments to the insurance company and furnishes proof to the S corporation, which reimburses the more than 2% employee-shareholder . Now here are the 3 steps: The cost of the health insurance premium are on the S corporation books. The S corporation must include the health insurance premium on the more than 2% S corporation employee-shareholder’s Form W-2 in Box 1.  The income is not subject to Social Security and Medicare.ᵇ The more than 2% S corporation employee-shareholder claims the health insurance deduction on page 1 of Form 1040. However, to claim the self-employed health insurance deduction on page 1 of the Form 1040, the more than 2% employee-shareholder must substantiate the following: The more than 2% employee-shareholder cannot take this insurance deduction if s/he or spouse is eligible for employer-subsidized health insurance.ᶜ The more than 2% employee-shareholder premiums cannot exceed the amount of S corporation salary.ᵈ If your S corporation employs less than 50 full-time employees,ᵉ then you do not have to provide health insurance benefits to your employees.  However, when you provide medical benefits to non-owner employees, your S corporation will be penalized $100-a-day if your S corporation reimburses employees for...

What is New for Desktop QuickBooks 2016

The following features are included with QuickBooks Pro and Premier 2016 and QuickBooks Enterprise Desktop 16.0 Bill Tracker  You can access it from either the menu bar, select Vendors, then Bill Tracker or from the Vendor Center or from the top or left navigation bars.   With the new Bill Tracker dashboard you can: View real-time data and status of the money-out transactions for the business Filter the displayed details by clicking on any of the color blocks at the top Filter the displayed details specifically for: Vendor, which includes a subtotal and the option to expeand or collapse selected vendor details Type of transaction Status of transactions including all, open or overdue Date range Group the displayed information by Vendor Clear/Show all will reset any filters you have selected   Bulk Clear Send Forms You can access it from the menu bar, select File, then Send Forms   With the Bulk Clear Send Forms, you can remove the Email Later selection on the Create Invoice window in batch from the Send Forms menus. Fiscal Year-to-Last Month Report Filter You can access from any report that permits you to filter for a specific date range.  From a displayed report, select the Dates drop-down then choose This Fiscal Year-to-Last Month.     These are just a few items new to QuickBooks,.  If you would like to learn more about these and other new QuickBooks tips and the QuickBook improvements, please call Susan at...

2016 Mileage Rates

Beginning Jan. 1, 2016, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) is: 54 cents per mile for business miles driven 19 cents per mile driven for medical or moving purposes 14 cents per mile driven in service of charitable organizations You always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. You may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle.  In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously. If you would like to learn more about this tax strategy, please call Susan at...