Category Archives: Finance

How Capital Gains Can Affect Your Tax Bracket (2019, 2020)

Traverse City, MI – Capital gain tax is paid on the profit made from selling your own assets. This tax levy is only due after a sale is made or completed. That is, if the value of your asset most likely a property increases, you are not required to pay the capital gain tax but as soon as you sell your asset then you will need to report it in your tax return.

Depending on a number of factors such as your income, other profit gains, and the number of deductions and credits that are available to you, the capital gain tax can affect your tax bracket. Efile Tax Advisor, a tax advisory blog explains in a recent post how capital gains can affect your tax brackets and clears any confusion taxpayers might have about the capital gain tax.

According to the tax blog, taxpayers who are not in the higher income brackets should not expect their capital gains from home sale to push them into a higher tax bracket if they are selling their house below the threshold of $250,000 for single filers or $500,000 for couples. Also, as long as the profit margin is not above the limit, taxpayers really do not need to file with the government.

The blog also offers scenarios where a taxpayer can avoid paying the capital gains tax or reduce it to the barest minimum. Taxpayers can pay little or nothing at all if their property increases in value every year since it was purchased or if their property has not been sold or exchanged in the last 5 years. This implies that there are higher tax rates for short-term capital gains as compared to long-term capital gains. Homeowners who reinvest their capital gains will get no deductions or credit but the gains can be used to fund other income avenues that are taxed at a rate much lower than most personal incomes.

For more information about the capital gain tax, please visit https://efiletaxadvisor.com/2019/05/09/will-capital-gains-put-me-into-a-higher-tax-bracket/

About Frank Ellis
Frank Ellis is a Traverse City Tax Preparation Planner and published author. He has written tax and finance related articles for eight years and has published over 900 articles on leading financial websites.

Contact Information
Frank Ellis
Efile Tax Advisor
945 East 8th Street Suite A
Traverse City, Michigan 49686

Email: efiletaxadvisor@gmail.com
Website: https://efiletaxadvisor.com

How Possible is it to Claim the Deduct Mortgage Interest?

Traverse City, MI – In a new post, the American Tax Service, a tax blog dedicated to educating Americans about the US tax system has revealed all there is to know about the mortgage interest tax breaks. Recent changes to the US tax system by the Tax Cuts and Jobs Act (TCJA) has left so many Americans puzzled as to what they are entitled to or which credits and deductions are still available for them.

One popular deduction which is still very much available to taxpayers is the mortgage interest tax deduction. The post sheds light into this once popular mortgage tax deduction, what has changed about it, and if it is still worth claiming.

Starting from 2018, the TCJA has reduced the principal limit in which interest can be deducted from $1,000,000 to $750,000. For married taxpayers who are filing a separate return, the limit has been scaled down from $500,000 to $375,000. These new changes are to last till the 2025 tax year but the limits do not apply to loans from 2017 or before.

The tax blog did put to rest the belief by most Americans that they will not be able to deduct any home equity loan interest with the new tax reforms. As long as the loan is used to improve the home and not used for other personal expenses, taxpayers will be able to deduct the interest. The mortgage deductions will only apply to a taxpayer’s primary residence or second home and will not apply to an investment property. Furthermore, the loan value and the interest deducted can’t be worth more than the initial cost of the home.

Mortgage interest deduction still remains an itemized deduction. So in order to claim it, taxpayers will need to make sure that their standard deduction isn’t worth more than their itemized deductions. But with the TCJA doubling the standard deduction, it is no longer a tough choice to make. This leaves only 30% of American taxpayers itemizing their deductions. And this is expected to drop even further to 5% in the coming years.

To read the original post, please visit https://americantaxservice.org/is-it-possible-to-deduct-mortgage-interest/

About Frank Ellis
Frank Ellis is a Traverse City Tax Preparation Planner and published author. He has written tax and finance related articles for eight years and has published over 900 articles on leading financial websites.

Contact Information
Frank Ellis

American Tax Service
945 East 8th Street Suite A
Traverse City, Michigan 49686

Email: webmaster@americantaxservice.org
Website: http://americantaxservice.org/

Understanding the Child & Dependent Care Tax Credit 2019, 2020

Traverse City, MI – 5/20/2019 – Childcare is perhaps the steepest monthly expense many families can not shy away from. Parents or custodians are left with no choice than to pay for daycare for their infants or disabled adults under their care. However, families who are struggling to keep up with this ever-increasing bill can get a bit of respite from the IRS according to a recent post by the National Tax Reports. The post sheds light on the child and dependent care tax credit and how taxpayers can take advantage of this credit to cover the cost of their childcare.

The Child and Dependent Care Credit can cover a percentage of daycare costs up to a maximum of $3,000 for one dependent and it is capped at $6,000 for two or more dependents. This percentage can range from 20% to 35% of the taxpayer’s adjusted gross income. National Tax Report recommends using a free dependent online calculator to quickly estimate your credit amount. The online software will only ask simple questions about your family so as to ascertain who qualifies as a dependent on your tax return to help you get the biggest tax return.

There are just a few basic requirements to be met in order to qualify for the child and dependent care tax credit. First off, taxpayers must have a dependent child less than the age of 13 or an older child who is physically or mentally unable to care for himself due to disability. The purpose of paying child care for these dependents must be to allow both parents to work or get a job or attend school on a full-time basis. It is also expected that both parents must have earned income either from a job or through self-employment. The only exception to this is if one of the parents is disabled and incapable of caring for another person.

There are also rules concerning daycare. The person providing the daycare must not be listed as a dependent of the taxpayer. Summer day camps qualify as providers while overnight camps do not qualify. This is because the IRS does not think an overnight camp as a form of work-related expense.

For more information about the Child and Dependent Care Credit, please visit, https://nationaltaxreports.com/eligible-for-child-dependent-care-tax-credit

About Frank Ellis
Frank Ellis is a Traverse City Tax Preparation Planner and published author. He has written tax and finance related articles for eight years and has published over 900 articles on leading financial websites.

Contact Information
Frank Ellis
National Tax Reports
945 East 8th Street Suite A
Traverse City, Michigan 49686
contact@nationaltaxreports.com
Website: http://nationaltaxreports.com

What Are the Best Tax Credits for Education 2019, 2020?

Traverse City MI, 05/13/2019 – Students who would like to get a bit of respite on the high cost of their education will find a new blog post on American Tax Service very resourceful. The post offers some insight into two of the best educational tax credits available to them in the upcoming tax year. And it seeks to help them make an informed decision on which of the educational tax breaks is best suited to their needs as they cannot use more than one in any given tax year.

The first of the tax credits explained by the American Tax Service is the American Opportunity Credit. To be eligible, the student must be enrolled at least half-time per academic period during the tax year in a school currently participating in the student aid program of the Federal government. Students who are already done with the first four years of schooling are excluded from the scheme as well as students with felony drug convictions. The American Opportunity Credit can be worth as much as $2500 and can be claimed on anything a student needs to attend school including tuition, books, and supplies. It is best suited for undergraduate college students.

The other tax credit is the Lifetime Learning Tax Credit. To be eligible, a taxpayer needs to only take a course per year at a school that is enrolled in the Federal student aid program. The credit does not also consider whether it is the first four years of schooling or not. Regardless of how many years you have spent in school, you can qualify for this tax credit. The Lifetime Learning Credit can also be used for anything from tuition to supplies but all supplies must be purchased directly through your school. The Lifetime Learning Credit is worth $2,000. However, it is a nonrefundable tax credit. It is best suited for students in postgraduate programs.

To claim any of the education tax credit, taxpayers must fill in and file Form 8863 with their tax returns. The American Tax service recommends using the H&R Block online tax filing. It will provide the form and easily help calculate exactly how much you are entitled to.

For more information, please read the original blog post by the American Tax Service here, https://americantaxservice.org/best-education-tax-credits/

About Frank Ellis
Frank Ellis is a Traverse City Tax Preparation Planner and published author. He has written tax and finance related articles for eight years and has published over 900 articles on leading financial websites.

Contact Information
Frank Ellis
American Tax Service
945 East 8th Street Suite A
Traverse City, Michigan 49686
Email: webmaster@americantaxservice.org
Website: http://americantaxservice.org

Medical Expenses Tax Deduction 2019, 2020

Traverse City MI, 05/13/2019 – The cost of medical care in America might be sky high but a lot of Americans are eligible for an itemized deduction for medical expenses in 2019 if they meet certain qualifications. A new blog post on Efile Tax Advisor sheds light on what these qualifications are and how to easily claim the medical expenses tax deduction in the 2019, 2020 tax season. So, if you do not want to potentially miss out on thousands of dollars in deductions.

Taxpayers whose medical expenses exceed 7.5% of their calculated adjusted gross income in the 2017 and 2018 tax year are allowed to make deductions for any medical expenses. For instance, if a taxpayer has an adjusted gross income of $45,000 and a medical expense of $5,475, the adjusted gross income of $45,000 will be multiplied by 0.075. This equals $3,375. So, any medical expenses above this figure will be deductible. In this case, that would be $2,100 in medical expenses.

Taxpayers should also note that not every type of medical expense is deductible as the IRS will only give credence to qualified medical expenses.

Some of the medical expenses that can be deducted are:
• Preventative care.
• Medical treatment.
• Dental and optical care.
• Visits to psychiatrists and psychologists.
• Prescriptions are also deductible, including hearing aids, glasses, and contact lenses.
• Medical mileage deductions can also be made

Some of the medical expenses that cannot be deducted include:
• Reimbursed medical expenses
• Employer-sponsored healthcare programs
• Cosmetic medical procedures
• Non-prescription drugs including insulin
• General health purchases, like vitamins and dietary foods

To claim the medical expenses deduction from the IRS, all deductions need to be itemized. Standard deductions do not apply and taxpayers, whose standard deductions are higher than the itemized deduction, will not be eligible for the medical expenses deduction.

To easily itemize these deductions, Efile Tax Advisor recommends using an online tax preparation to help work out the figures quickly and easily.

For more information on the Medical Expenses Tax Deduction 2019, 2020 and how to easily claim it using an online tax preparation software, please visit, https://efiletaxadvisor.com/2019/05/06/medical-expenses-tax-deduction/

About Frank Ellis
Frank Ellis is a Traverse City Tax Preparation Planner and published author. He has written tax and finance related articles for eight years and has published over 900 articles on leading financial websites.

Contact Information
Frank Ellis
Efile Tax Advisor
945 East 8th Street Suite A
Traverse City, Michigan 49686
Email: efiletaxadvisor@gmail.com
Website: https://efiletaxadvisor.com/