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Tax Tips and Resources in Twin Cities, MN



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Archived Tuesday Tax Tips


Are Tips Taxable?

All tips are taxable. This includes tips directly from customers, tips added to credit cards, and tips received from a tip-splitting agreement with other employees. Use Form 4137, Social Security and Medicare Tax on Unreported Tip Income, to report the amount of any unreported tip income to include as additional wages. This includes the value of non-cash tips such as tickets, passes or other items. See IRS Publication 531, Reporting Tip Income on (IRS 2017ARD 061-6) (TTT 05/09/17)

What to do after Tax-Filing Deadline:

(1) If you missed filing, file and pay as soon as possible to reduce penalties and interest. There is no penalty for filing a late return after the tax deadline if the taxpayer receives a refund. (2) Taxpayers who owe taxes can view their balance, pay with IRS Direct Pay, by debit or credit card or apply for an online payment agreement. (3) If the taxpayer receives an IRS notice or letter, visit the “Understanding Your Notice or IRS Letter” on the IRS website for various questions and answers you may find helpful. (IR-2017-88) (TTT 05/02/17

Missed the Tax Return Deadline:

Taxpayers who owe federal income tax should file and pay as soon as they can to minimize any penalty and interest charges. For taxpayers due a refund, there is no penalty for filing a late return. If you owe and cannot pay in full, pay as much as you can when you file your return. Taxpayers should use the IRS Online Payment Agreement Tool to set up a monthly payment plan. (IRS 2017ARD 078-1) (TTT 04/25/17)

Credit for Retirement Savings Contribution:

Taxpayers who contribute to a retirement plan, like a 401(k) or an IRA, may be able to claim the Saver’s Credit. The maximum contribution is $2000 per person. The credit cannot be more than the amount of the tax that a taxpayer would otherwise pay in taxes. This credit will not change the amount of refundable tax credits. There are income limits per filing status and several other rules. See Form 8880 and instructions for more information. (IRS 2017ARD 063-10) (TTT 04/18/17)

Extension of Time to File:

A taxpayer may file Form 4868 for an automatic six-month extension through October 15. However, this extension of time to file, which must be filed or postmarked by the April 18 deadline, does not give you more time to pay any taxes due. If you have not paid at least 90 percent of the total tax due by April 18, you may be subject to an estimated tax penalty. (TTT 04/04/17)

Education Tax Benefit – AmericanOpportunity Credit (Part II):

The American Opportunity Credit (AOC) is worth a maximum benefit up to $2500 per eligible student. It is only available for the first four years at an eligible college or vocational school for students pursuing a degree or other recognized education credential. The student must be enrolled at least half time for at least one academic period during 2016. Income phase-outs do apply. (IRS 2017ARD 054-1) (TTT 03/28/2017)
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Education Tax Benefit – Lifetime Learning Credit (Part I):

The Lifetime Learning Credit (LLC) is worth a maximum benefit up to $2,000 per tax return, per year, no matter how many students qualify. It is available for all years of postsecondary education and for courses to acquire or improve job skills. The positive benefit is the availability for an unlimited number of tax years. The 2016 phase-out income levels are: single and head of household is $55,000 - $65,000; married filing joint is $111,000 - $131,000; and married filing separately is zero (not eligible). (IRS 2017ARD 054-1) (TTT 03/21/2017)

Standard Deduction vs Itemization:

Most taxpayers claim the standard deduction when they file their federal tax return. However, some filers may be able to lower their tax bill by itemizing. A few of the itemized deductions are home mortgage interest, state and local income taxes or sales taxes, real estate and personal property taxes, gifts to charities, unreimbursed medical expenses, etc. The standard deduction amounts are: Single and married filing separately - $6300; Married filing joint - $12,600; Head of household - $9300; and Qualifying widow(er) - $12,600. (IRS 2017ARD 037-1) (TTT 03/14/17)

IRS Alert: 2013 Unclaimed Tax Refunds:

The IRS is alerting tax payers who have not filed a tax return for 2013 that they may be one of the nearly one million who may be due a refund from that year. Taxpayers must claim their part of the almost $1 billion by this year’s April 18, 2017 tax deadline. To claim a refund, taxpayers must file their 2013 federal income tax return. The law generally provides a three-year window to claim a tax refund. For 2013 returns, the window closes on April 18, 2017. (IRS 2017ARD 045-2) (TTT 03/07/2017)

Tax Tips for Parents:

Your children may qualify you for certain tax benefits. You should consider the following when filing your federal tax return: (1) dependent (deduction of $4,050 for each qualified dependent), (2) Child Tax Credit (maximum credit is $1,000 per child), (3) Child and Dependent Care Credit (children under age 13 are among those who qualify), and (4) Earned Income Tax Credit (taxpayers who worked but earned less than $53,505 may get up to $6,269 in EITC). See IRS web site for more information. (IRS 2017ARD 033-3) (TTT 2/28/17)

Tax Help from (Part II):

Taxpayers are able to check on their refund by using “Where’s My Refund?” tool by clicking on the ‘Refunds’ tab on Another way is to use the IRS2Go mobile app to access the refund tool. The “IRS EO Select Check” tool will allow you to document whether an organization qualifies for a charity deduction. If a taxpayer does not have a copy of their tax return, they may use the IRS “Get Transcript” self help tool on (IRS 2017 ARD 024-1) (TTT 02/21/17)

Tax Help from (Part I):

The IRS web site has many tools to help with your taxes available 24/7. One helpful tool is the “Interactive Tax Assistant.” This tool covers many common topics. At the site you type in the question or search terms that can lead you step by step to the answer. Another tool is the “IRS Tax Map.” It has a list of tax law subjects to review that combines tax topics, forms, instructions and publications. (IRS 2017 ARD 024-1) (TTT 02/14/17)