The Earned Income Tax Credit Should Not be Overlooked

By Sandor Lenner,CPA

Many working people may be overlooking the Earned Income Tax Credit or EITC, that may add an additional $5,600 or more to their wallets. This tax credit as the name implies, is for people who work for a living, but don't make a lot of money. The credit was created in 1975 to help offset Social Security taxes and to provide an incentive for work. It is one of the Federal government's largest benefit program for working families. Every dollar counts in today's economy, so eligible taxpayers should make sure they do not miss this tax credit.

To Qualify for The Earned Income Tax Credit - To qualify for this credit taxpayers must meet all of the, age, income, dependency and citizenship requirements. Also, to qualify married taxpayers need to file joint return as the earned income credit does not apply to persons who are married, but choose file separately. Further, investment income cannot exceed $3,100 for 2009.

Unfortunately, more people will qualify for the Earned Income Tax Credit for the first time because their income has declined, which may have resulted from pay cuts or a job loss. It is also applicable to those taxpayers who change their marital status or added children to their families during 2009.

If you have a family with three or more children you may be entitled to a larger credit in 2009 as compared to 2009. The reason for the increase is a result of the American Recovery and Reinvestment Act, which temporarily provides an increase in the Earned Income Tax Credit for taxpayers with three or more qualifying children. This new legislation was signed during 2009, and therefore the changes apply to 2009 when you file your income tax return during 2010. The maximum Earned Income Tax Credit for this new category is $5,657.

To receive this credit you are required to file a tax return. Tax Tip- If you are not required to file an income tax return, because you tax liability is zero or you because you do not owe any taxes, then you should strongly consider filing an income tax return this year to claim the credit, providing you are eligible for Earned Income Tax Credit.

The Amounts of the Earned Income Tax Credit - The following indicates the levels of tax credit that may be available to you. Providing you are married with 3 children with an income from $12,570-$21,420 you may be eligible for the maximum credit of $5,657. The maximum credit for 2009 is:(i)$5,657 with three or more qualifying children (ii)5,028 with two qualifying children (iii)$3,043 with one qualifying child and (iv)$457 with no qualifying children.

The Internal Revenue Service estimates that an additional 20% to 25% of taxpayers may qualify for EITC but may not be aware of it. Tax Tip - This information is very important and is worth repeating for those taxpayers who prepare their own tax returns. The EITC is a refundable credit, i.e., if the EITC reduces your taxable income below zero you are eligible to receive a tax refund for that amount.

This article is not intended to be legal or accounting advice. Tax laws are complex, change constantly and each situation is unique. The reader is advised to do his or her own due diligence and consult competent professionals in these areas.This information is complex and you can obtain more information directly from the Internal Revenue Service by asking for IRS publication 596. - 30796

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Learn How to Get Out of Debt Today with Freedom Debt Management

By John Case

We all know the importance of having credit. Without it, many of the things in our lives would not be there. For example, you would probably not have that nice television in your living room without credit.

The problem with the great supply of credit in this country is that that some people choose to abuse it. Credit abuse takes place when people buy things on credit that they cannot afford. It is for this reason that people fall into credit card debt and need some assistance to get out.

Freedom Debt Management is there to help everyone with his or her debt troubles. This company has been around for many years and has built a great reputation. After only two short years, almost all Freedom Debt Management clients are totally debt free. Now that is amazing!

So what exactly does this company do for you? Well, to start things off they offer free counseling to evaluate where you stand financially. They are calm and they take the time to figure out exactly what your needs are. At the end of the session, they will tell you what services they can offer you and will ask if you would like to sign up with their program.

So how can this company help me specifically? Freedom Debt Management has vast amounts of experience working with both you and your creditors. Their experience will ensure that you will get a better result than if you tried to do it all alone.

How else can they help? Freedom Debt Management is also able to help you shrink the total amount of money you owe creditors. This actually is beneficial to both you and your creditor because your creditor recovers some of the funds and you have to pay less overall.

It is not uncommon to feel completely embarrassed and overwhelmed by credit card debt. However, you should not feel like this because there are literally thousands of people in the same exact position as you. You should never forget that you are not alone in this fight.

Freedom Debt Management is different from others you may have already tried. They may be the company you have been waiting for to help with your debt issues. So give Freedom Debt Management a chance today! - 30796

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Know The 60 Day Rule For 401k Rollovers

By Roger Harrison

It is often difficult what option you should use to get your funds out of your existing 401k account. One of the major stresses of this process is the uncertainty of what exactly you should be doing. Add this stress to already existing stress of managing your retirement account and the whole process can be rather overwhelming.

Because of the importance of this decision, it is critical that you take the necessary time to research and explore the different options you have to make this 401k transfer. Consulting your financial consultant or tax advisor is always a good idea.

Not only can a good financial planner steer you in the direction of which type of retirement account to transfer into (401k, Traditional IRA, Roth IRA, etc...), but they are also updated on the current tax laws regarding transfers.

As with many other tax issues, the IRS has complicated the process enough that a tax professional is required to sort through the rules. One of the rules that often traps investors is the 60 day transfer rule.

The 60 day rule simply refers to the amount of time that you are allotted to reallocate your funds from your retirement account. Once you make the decision to move your funds, the IRS doesn't want you to dawdle. They intend for you to be decisive in your decision and not drag out your choice.

Despite the simplicity of this rule, the tax implications of it are very present. The best way to avoid this penalty is to determine where the funds are going well before ever transferring them in the first place. A good advisor will help you get your ducks in a row before making the transfer. This allows you sufficient time to fill out everything that is required to move the funds.

The IRS has been notoriously strict on this 60 day rule. There are cases in which transfers on the 61st day have been rejected by the IRS. There are very few circumstances in which the IRS is lenient on this stipulation.

The only scenario in which the Internal Revenue Service is willing to consider a late transfer is in the case of unusual personal circumstances. These include death, disability, hospitalization, and incarceration. This compassion ruling is not really a good substitute for getting your transfer done in time, and is often associated with a fine for the waiver. The fine is wholly dependent upon the size of the transfer between accounts. - 30796

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Some Tips For Day Trading the Market

By Tom Collin

Day trading the stock market involves the rapid buying and selling of stocks on a daily basis. This system is used to secure quick profits from the relentless changes in stock values, minute to minute, 2nd to 2nd. It is rare a day trader will remain in a trade over the course of a night into the following day.

The main question that most people ask when it comes to day trading is simple : 'is it necessary to sit at a PC PC watching the markets all day 24x7 to be a successful day trader?'

The answer is no. It is not important to sit at a computer twenty four seven. There are a number of things to consider, but generally the rule of day trading is to trade when everybody else is trading.

As with all fiscal investments, day trading is dodgy in truth, it is one of the riskiest forms of trading out there.

If you are constrained by a small amount of capital, you may not be in a position to buy large amounts of a stock, but purchasing only a small amount can add to the danger of a loss. And, glaringly, it is not possible to forecast with certainty which stocks will end up in profits and which in losses.

It's also important to know that in day trading, it's the number of shares instead of the value of shares that should be the focus. If you day trade, you may face losses, but even for the costlier stocks, the loss should be debatable, because prices do not usually fluctuate to an acute degree over the course of only 1 day.

The day trading industry deals in a big variety of stocks and shares. Here are only a few : Growth-Buying Shares shares made from profit, which continue to grow in value. Eventually, these shares will start to decline in price, and a professional seasoned trader can usually envision the future of this type of share.

Although these shares are generally inexpensive, they seem to be a very risky investment for day traders. You'd be safer to go with big caps and / or mid-caps, which are way more secure and stable thanks to a premium.

Unloved Stocks company stock which has not performed well in the past. Traders buy these stocks in the hopes of generating profits if and when the stock rises in worth. As with small caps, unloved stocks could be a risky choice for day traders.

The best way to ascertain which kind of stock is best for you is to invest some time for careful research, a information understanding of market patterns, a solid technique, and a disciplined trading plan.

The key to successful day trading is to be prepared. Know as much as practicable about the industry before you start essentially trading. You need to be taught how to trade ONLY when the market gives the right signals. - 30796

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Home Improvement Tax Credits

By JT Miller

A lot of homeowners are living in one of their largest tax deductions without even knowing it. This is especially true of people who have upgraded their home or done some remodeling project recently. There are actually lots of different ways you can use home improvements for tax deductions.

The improvements you make to your home can be eligible for deductions or credits depending upon the size of the project, the reason for the home upgrade and the cost and time frame that was allotted to the remodeling or home improvement.

Tax Deduction for Lawn Care - If you own your own business or work for a company that requires you to meet clients or customers in your home, then you may be able to deduct a portion of the lawn care and landscaping expenses you pay to keep your home's exterior looking good and presentable.

Swimming Pool Tax Deduction - Tax courts have ruled that a portion of swimming pool expenses can be deducted from your taxes if there is a solid medical reason to have a pool. In one case a gentleman with low lung capacity used a swimming pool to exercise and increase his breathing strength. Since he used the pool more than his family he was allowed to deduct part of the cost as a medical expense.

Tax Credit for New Windows - If you're planning to upgrade and replace your home's old windows with new energy efficient ones, now's the time to do it. There are now tax credits in place for the 30% of the cost of eligible windows, up to $1,500 for the next two years.

It's always a good idea to take copious photos and keep as much information about each home improvement you perform on your house anyway, because those items may become necessary if you ever have a problem or wish to sell your house in the future. There are lots of details and criteria for some of these deductions and you may want to speak to a qualified tax expert before embarking on a home improvement.

If you're planning on finishing some home improvements this year, you should really look into the possible tax savings that may be available! - 30796

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What Does The Term Tax Fraud Cover?

By Lewis Arbour

We all have a responsibility to pay the federal government taxes each year but there are individuals and companies that do not believe this refers to them. Anyone found doing this is committing an offence under the tax laws of the United States. The act of flaunting the rules and laws institutionalized for the proper functioning of the government is considered a serious offence. These types of offences are termed as white-collar crimes in legal circles, as ordinary citizens with no previous criminal record usually commit these crimes.

The term Tax Fraud covers all the crimes relating to tax that has not been paid for whatever reason, even for those who are just late in submitting their tax returns. Tax fraud lawyers are specialized attorneys that deal with issues of tax fraud and represent clients who are accused of tax fraud.

A tax fraud lawyer however, does not help people complete tax returns and usually only becomes involved when the IRS has accused a person or company of tax irregularities. They are often hired to help clients who suspect they may be under investigation or where they have already been warned hat charges will be forthcoming. Often the purpose of hiring a tax fraud lawyer is to assist with negotiations between themselves and the IRS to come to an arrangement where the taxes due can be repaid without a term of imprisonment for tax fraud.

It is not uncommon for people and even companies to fail in their tax responsibilities through lack of knowledge or understanding of their responsibilities. Some individuals and firms also fall foul of poor advice for their tax planning form the tax specialists they employ to represent them.

Often attorneys will provide proof that their client was the unwilling victim of tax fraud and although still guilty it is usual for the punishment in these circumstances to be more lenient or the charges dropped completely. The need to choose a tax consultant that has proper qualifications cannot be underestimated in circumstance like this if investigation by the IRS is too be avoided.

The normal approach by a tax fraud lawyer will be too reason the argument that prosecuting the individual or company will not serve the public interest as recovery of the taxes owed is less likely. Often this line of reasoning works if presented by a good lawyer as it means that the offender will still pay any tax that is owed without the financial burden of paying for them to be in prison. - 30796

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The Accounting Cycle Explained

By Mark Walters

The accounting cycle is used to analyze and summarize business transactions and events, and it helps businesses of all sizes ensure that their financial records are accurate, up-to-date, and in accordance with accepted accounting principles.

So, what does the accounting cycle involve? Lets break it down on a step by step basis...

1) Analysis

Analyzing all of the transactions from the past year, and locating all relevant documents and receipts, is the first step that needs to be taken.

2) General Journal

Next, it is necessary to create a central record of all of the transactions. This record is referred to as a General Journal.

3) Posting To The Ledger

Once a General Journal has been created, each transaction should then be posted to the ledger, which is a paper / electronic trail that is used to both verify accuracy and to refer to if balances do not tally later on.

4) The Unadjusted Trial Balance

The next step is to total up debit and credit balances to ensure that they are equal. Information from the ledger should also be compiled so that financial statements can be prepared.

5) Adjusting

Having recorded and verified external transactions (like utility payments and supply purchases), internal transactions (like unearned revenue and prepaid rent) must now be factored in.

6) The Adjusted Trial Balance

The preparation of the adjusted trial balance is the next task, which encompasses all internal and external transactions for the reporting period. Again, there accuracy is verified, by ensuring the credit and debit sums are equal.

7) Financial Statements

The Income Statement, Statement of Owner's Equity and Balance Sheet are now created.

8) Closing Of The Trial Balance

Permanent accounts now have their balances carried into the next period, while temporary accounts are closed. The last entries made in those accounts are posted to the capital account of the business, after which all balances (expense, revenue, withdrawal, etc.) should be zero.

9) Post-Closing Trial Balance

Finally, comes the post-closing trial balance, which lists the balances of the accounts that were not closed (such as liabilities, assets, and owner's equity). This trial balance helps verify that permanent accounts balance (i.e. that they have equal debit and credit sums) and that all temporary accounts were properly closed.

It is important that business owners understand the steps involved in this accounting cycle. The reason is that they are ultimately responsible for any mistakes, whether by accident or not, in their finances. However, it would be a mistake for them to try and cut costs by doing their own accounting, as any mistakes made may not only be costly, but could also land them in trouble with the tax office.

Hiring a reputable accounting firm is therefore highly advisable. They will offer peace of mind that the accounting cycle is being appropriately followed through with, and will also be able to offer advice on how to better organize the finances of the business in the future. - 30796

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