One of the earliest lessons in life is that actions have consequences, and approaching retirement age without a substantial nest egg is one of those consequences. But if you are in this situation, you are not alone, as millions of other Americans are faced with the same need to save enough to retire comfortably.

Our priorities shift throughout our lives. Early in the life cycle, home ownership is a priority; that is usually followed by raising and educating children. However, as retirement approaches, the focus needs to shift toward retirement funding. By the time most people are 45 or 50, their children are on their own, the mortgage is close to being paid off, and there is more discretionary income to set aside for retirement.

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Whether you’re a recent high school graduate going to college for the first time or a returning college student, it will soon be time to get to campus—and payment deadlines for tuition and other fees are not far behind. Students or parents paying such expenses should keep receipts and be aware of some tax benefits that can help offset college costs.

Typically, these benefits apply to you, your spouse, or a dependent you claim as an exemption on your tax return. (more…)

While the majority of Americans get a tax refund each year, there are many who owe tax and some who can’t pay what they owe all at once. If you find yourself in the position of owing taxes, there are a number of ways to deal with the issue:

1. Get a Loan to Pay the Balance – If you owe the IRS and don’t pay on time, they will assess interest and penalties. If you work out an installment payment agreement with the IRS, they will also charge you a user fee for setting up the agreement. The least expensive way to deal with the liability may be to get a loan and pay the liability in full with the loan proceeds. Whether it is a loan against your property or a loan from a family member, the cost will generally be far less than the interest, penalties and fee the IRS will charge. (more…)

If you are an eligible small employer or a tax-exempt eligible small employer, you may qualify for the small employer health insurance premium credit. This credit is one of the first health care reform provision to take effect as a result of the Health Care Act that was enacted in 2010. The credit reduces a small employer’s tax liability and is claimed on the employer’s income tax return; for eligible tax-exempt employers, the credit reduces the organization’s payroll taxes. (more…)

A frequent question from taxpayers is: how long does the IRS have to question and assess additional tax on my tax returns? For most taxpayers who reported all their income, the IRS has three years from the date of filing the returns to examine them. This period is termed the statute of limitations. But wait – as in all things taxes, it is not that clean cut. Here are some complications: (more…)

The distinction between a business activity and a hobby is not a black-and-white issue but instead comes in various shades of grey, which makes it a frequent topic in tax court. 

What is at stake? – At issue with the business or hobby determination is the treatment of the activity’s expenses.  A for-profit business is able to deduct all of its business expenses even if the net result is a loss, whereas a not-for-profit activity (hobby) can only deduct the expenses related to that activity to the extent there is income from that activity.  In other words, no loss is allowed.  To further complicate the issue, the expenses of a not-for-profit activity are not netted against income like they are for a for-profit business. Instead, they must be deducted as a miscellaneous itemized deduction subject to the 2% of AGI limitation, and the income from the activity must be included in gross income. In addition, the tax code dictates the order in which the not-for-profit activity’s expenses can be used to offset its income: (more…)

A rumor has been circulating for some time that home sales will be subject to a 3.8% federal sales tax beginning in 2013.  Like most rumors, it has been initiated by someone who doesn’t have all the facts – in this case, someone who does not understand taxes. Unfortunately, the misinformation has been perpetuated through our modern means of communication. (more…)

If you are unfortunate enough to be out work, you may be spending time attending career fairs and traveling around looking and interviewing for employment.  Some of the expenses you incur attempting to secure employment may be deductible on your tax return.  

Here are several things you should know about deducting costs related to your job search. (more…)