Do I have to File Taxes This Year?

The amount of income you can receive before having to file your taxes has increased for the 2010 tax year.  See the table below.

Filing Status	End of 2010 were	Then File a Return if your Gross income was at least…
Single	Under 65	$9,350
	65 or Older	$10,750
Married Filing Jointly	Under 65 (both spouses)	$18,700
	65 or Older (one spouse)	$19,800
	65 or Older (both spouses0	$20,900
Married Filing Separately	Any Age	$3,650
Head of Household	Under 65	$12,050
	65 or Older	$13,450
Qualifying Widow(er) with Dependent Child	Under 65	$15,050
	65 or Older	$16,150

Just because you fall within these guidelines does not mean you should not file your taxes.  Talk with your tax preparer because chances are… if you don’t file your return you will be missing out on your refund…. and the IRS will not be calling you if they owe you money… they will just keep it. 

Tami Highbaugh-Abdullah

Highbaugh Tax

317.345.4182

tami@highbaughtax.com

No Home Office Deduction for Unlicensed Daycare Providers?

Did you know that if you are caring for children in your home as your main source of income but are not a licensed home day care provider, you cannot take the Home office deduction? 

See the following information courtesy of J.K. Lasser:

Usually, in order to deduct home office expenses for conducting a business at home, the space for the office must be used regularly and exclusively for business.  However, special rules apply for figuring a home office deduction by a daycare provider.  The usual exclusive use requirement that a portion of the home be used solely for business does not apply; children may use many areas of the home that are also used by the provider's family for nonbusiness purposes.

In order to qualify for any home office deduction, a daycare provider must meet state licensing requirements.  In one recent case, a daycare provider who regularly cared for five to six children in her home failed to obtain a state license because she didn't know she needed one. State law (Illinois) requires licensing for anyone providing daycare services to more than three children (including the provider's children) under the age of 12.

Note: The fact that the taxpayer claimed home office deductions in earlier years and these deductions were not disallowed does not change the results.  The fact that she escaped audit was her good fortune for those earlier years.

Tami Highbaugh-Abdullah

Highbaugh Tax

317.345.4182

What you CANNOT Claim on your Taxes

People are always asking me what they can and cannot claim on their taxes so I thought I would put a list of items that are NOT deductible on the blog.  These are items you cannot claim on your taxes and this list came directly from the IRS website.

Nondeductible Expenses

You cannot deduct the following expenses.

List of Nondeductible Expenses

• Adoption expenses.
• Broker's commissions that you paid in connection with your IRA or other investment property.
• Burial or funeral expenses, including the cost of a cemetery lot.
• Campaign expenses.
• Capital expenses.
• Check-writing fees.
• Club dues.
• Commuting expenses.
• Fees and licenses, such as car licenses, marriage licenses, and dog tags.
• Fines and penalties, such as parking tickets.
• Health spa expenses.
• Hobby losses—but see Hobby expenses, earlier.
• Home repairs, insurance, and rent.
• Home security system.
• Illegal bribes and kickbacks—see Bribes and kickbacks in chapter 11 of Publication 535.
• Investment-related seminars.
• Life insurance premiums.
• Lobbying expenses.
• Losses from the sale of your home, furniture, personal car, etc.
• Lost or misplaced cash or property.
• Lunches with co-workers.
• Meals while working late.
• Medical expenses as business expenses other than medical examinations required by your employer.
• Personal disability insurance premiums.
• Personal legal expenses.
• Personal, living, or family expenses.
• Political contributions.
• Professional accreditation fees.
• Professional reputation, expenses to improve.
• Relief fund contributions.
• Residential telephone line.
• Stockholders' meeting, expenses of attending.
• Tax-exempt income, expenses of earning or collecting.
• The value of wages never received or lost vacation time.
• Travel expenses for another individual.
• Voluntary unemployment benefit fund contributions.
• Wristwatches.

Do you have tax questions?  Feel free to post them here or email me at Tami@highbaughtax.com

Tami  Highbaugh-Abdullah

Highbaugh Tax

317.345.4182

Did you know that Earned Income Credit Increased this year?

Did you know that Earned Income Credit increased this year? 

Amount of credit increased. The maximum amount of the credit has increased. The most you can get for 2010 is:

• $3,050 if you have one qualifying child,
• $5,036 if you have two qualifying children,
• $5,666 if you have three or more qualifying children, or
• $457 if you do not have a qualifying child.

Earned income amount increased. The maximum amount of income you can earn and still get the credit has increased for 2010. You may be able to take the credit if:

• You have three or more qualifying children and you earn less than $43,352 ($48,362 if married filing jointly),
• You have two qualifying children and you earn less than $40,363 ($45,373 is married filing jointly),
• You have one qualifying child and you earn less than $35,535 ($40,545 if married filing jointly), or
• You do not have a qualifying child and you earn less than $13,460 ($18,470 if married filing jointly).

Investment income amount. The maximum amount of investment income you can have and still get the credit is still $3,100 for 2010.

Advance payment of the credit. If you get the advance payments of the credit from your employer with your pay, the total advance payments you get during 2010 can be as much as $1,830.

Want to see the Earned Income Credit Table so you can figure your EIC Credit?  Click the link go to page 43 to see the schedule.

Do you have any Tax Questions?  Feel Free to ask them here or email me at Tami@highbaughtax.com

Tami  Highbaugh-Abdullah

Highbaugh Tax

317.345.4182

Tax Law Changes Delaying Refunds, Will You Be Affected?

Seems as though every year there is some tax law change that can delay our tax refunds. This year is no different… only this year the delay will affect anyone who:
• Files a Schedule A (itemized deductions)
• Teachers taking the classroom expense deduction
• Parents taking the Higher Education Tuition Deduction
• Those who are Repaying their First Time Home Buyers Credit (taken on 2008 return)
• Those taking credit for the purchase of an Electric Vehicle
The reason for the delay are late tax law changes made by congress in late December that has caused the IRS to reprogram their processing system for accepting paper and electronic tax returns. Tax filers claiming the above deductions or credits will have to wait until Mid to Late February before their returns can be accepted.

This doesn’t mean you should delay filing your return with your Tax Preparer. If your preparer files electronically, your return will be held until the system can accept it; your preparer will be notified once the return has been accepted.

For the rest of us who don’t claim any of the above, the Tax Season Officially Started January 14th, 2011. Get your Tax documents together, go through your personal and business tax checklists, and schedule your appointment with your Tax Preparer ASAP to beat the tax year rush.

***The IRS has just recently announced that they will begin accepting and processing these returns on the 14th of February***

Tami Highbaugh-Abdullah
Highbaugh Tax
317.345.4182
Tami@highbaughtax.com

What is the Standard Deduction for 2010?

The tax season starts January 14th, 2011.  I will begin answering questions that clients ask me via the blog.  Question #1 is what is the Standard Deduction?

The Standard Deduction for 2010 for each filing status:

Single $5,700

Head of Household $8,400

Married, Filing Jointly $11,400

Married, Filing Separately $5,700

Qualifying Widow(er) $11,400

If your filing status is Married Filing Separately, you and your spouse will both need to either itemize your deductions or take the standard deduction.

Tami Highbaugh-Abdullah

Highbaugh Tax

317.345.4182

General Business Tax Deductions Checklist

Don't let your Taxes Drive you Nuts 

A good number of my clients own businesses and having a Business Tax Checklist helps them gather all their information together when it is time to prepare their taxes.   Below I have compiled a list of general tax deductions for businesses.  Every business is different therefore, it is best to talk to your tax accountant to ensure you are claiming everything.

1.             Accounting or Bookkeeping Fees

2.             Automobile Expenses – with this deduction you must use mileage or actual expenses,  talk to your tax accountant to see which is best to use, ensure you keep record of both.

a.    Mileage

b.    Repairs

c.    Insurance

d.    Gas/Oil

e.    Car Washes

f.      Tags / Registrations

g.    Vehicle Purchase

h.    License

i.      Parking / Toll Charges

j.      Drivers Training Expense

3.             Business start up costs

a.    Incorporation, LLC, or Partnership Set up costs

4.             Advertising

a.    TV, Radio, Print, Internet

b.    Billboards

c.    Promo Products

d.    Automobile signs

e.    Market research

f.      Mailing lists

g.    Business Cards

h.    Trade Show Costs – Booths

i.      Search Engine Optimization

j.      Paid Internet Marketer

k.     Flyers

5.             Bank Charges for your business account

6.             Internet Access Charges

7.             Charitable Contributions

8.             Continuing Education/Seminars/Training

a.    Books

b.    Tuition

c.    cd’s and dvd’s

d.    Business starter kits

e.    Webinars

f.      Conference Calls

9.             Commissions and Fees

10.          Delivery, Postage, Shipping Costs

11.          Dues to Clubs, Organizations, or Associations for Business

12.          Entertainment Costs

13.          Equipment purchases

14.          Fax line

15.          Insurance Premiums

16.          Interest Expense

17.          Laundry / Dry Cleaning – Depends on your occupation ask your tax accountant to be sure

18.          Legal Fees

19.          Offices Supplies

20.          Property Taxes

21.          Protection Costs such as an alarm for the office

22.          Rent

23.          Repairs / Maintenance

24.          Subscriptions

25.          Telephone / Cell Phone used for business

26.          Travel

27.          Landscaping and snow removal

28.          Utilities

29.          Wages

Tami Highbaugh-Abdullah

Highbaugh Tax

317.345.4182

Tami@highbaughtax.com