This article is in response to many questions that our small business CPAs have received about Archer Medical Savings Accounts (MSAs). These accounts are similar to IRAs. Like IRAs, special rules govern when your money can be withdrawn, for what purpose the funds can be used and the deductibility of contributions. Because Congress has not extended Archer MSAs, they have been eclipsed by health savings accounts (HSAs). Our CPAs know that this is especially important to freelancers, self-employed persons, and small business owners in new york.

If you have an MSA, a decision should be made whether to continue to operate as an MSA. Is the MSA adequate for your needs or should it be rolled over into a new HSA account? Administrative costs for setting up an HSA are generally a good reason not to convert to an HSA. A greater degree of flexibility in certain business settings may be another good reason.

Like an MSA, an HSA is a tax-exempt trust or custodial account to which tax-deductible contributions may be made by individuals with a high deductible health plan. HSAs provide tax benefits similar to, but more favorable than, those provide by MSAs. What’s more, unlike HSAs, only individuals who are self-employed or employed by a small business may participate in an MSA.
Both MSA and HSA participants must be enrolled in a “high deductible health plan.” However, that deductible is higher for MSAs. For 2010, MSA must carry an annual deductible of at least $2,000 (the same as for 2009), and at least $4,050 (up from $4,000 in 2009) for family coverage), with a maximum out-of-pocket cap of $3,000 (down from $4,000 in 2009) for individual coverage ($6,050 for family coverage).

HSAs, on the other hand, must only have an annual deductible of at least $1,200 for self-only coverage ($2,400 for family coverage), with an out of pocket cap of $5,9500 ($11,900 for family coverage). In both cases, the amounts are adjusted for inflation each year.

Qualified distributions from both MSAs and HSAs are tax free, even though contributions to either account are deductible when deposited. You may withdraw money to pay for your medical expenses and the medical expenses of your spouse and dependents. Generally, most medical expenses can be paid by these withdrawals. Withdrawals for most non-medical purposes, however, are subject to federal tax and a penalty.

The future of MSAs and HSAs is uncertain. A final health care reform bill, which is making its way through Congress, will likely impose new limits on these arrangements, such as increasing the penalty for early nonqualified withdrawals from an HSA. Our office of CPAs for the self- employed in New York will keep you informed on the developments, and how they may affect your NYC small business.

About us: MEDOWS CPA, PLLC is a boutique New York CPA NY Firm serving the needs of Individuals & Small Businesses in New York City and throughout the nation.  We work with the self-employed, freelancers, LLC, C-Corporations and S-Corporations to help them with their accounting and tax needs.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

http://www.medowscpa.com

http://taxblog.medowscpa.com

info@medowscpa.com

A Unique, Boutique New York CPA Firm Serving the Needs of Individuals & Small Businesses

Our team of Manhattan CPAs have important news for high net worth individuals in New York. If you are someone who regularly makes charitable contributions, you may be aware that charitable contributions of property in excess of $5,000 require that you attach an appraisal to your New York City income tax return. In response to gross valuation misstatements, the IRS has tightened the definition of a qualified appraisal and qualified appraiser. Unfortunately, this affects many high net worth individuals in NYC.

The IRS has determined that a qualified appraisal is one that is conducted by a qualified appraiser in accordance with generally accepted appraisal standards. A qualified appraiser is a high net worth individual who:
1.    Has earned an appraisal designation from a recognized professional appraisal organization or has otherwise met the minimum education and experience required by the IRS,
2.    Regularly performs appraisals for which the individual receives compensation,
3.    Demonstrates education and experience in valuing the type of property subject to the appraisal, and
4.    Has not been prohibited from practicing before the IRS at any time during the three years prior to the appraisal.
In addition, the appraisal must be made not more than 60 days before the date the appraised property is contributed to a charitable organization, and not later than the time it must be received by the donor.

However, to ensure that you get the full advantage of the value of the appreciated property, it is important to recognize the IRS requirements regarding the appraisal and plan accordingly. Our team of Manhattan income tax CPAs can assist you in planning for your charitable contributions. Our CPAs have many high net worth individuals in NYC as clients, are are familiar with their New york income tax needs. Please call our office at your earliest convenience to arrange an appointment.

About us: MEDOWS CPA, PLLC is a boutique New York CPA NY Firm serving the needs of Individuals & Small Businesses in New York City and throughout the nation.  We work with the self-employed, freelancers, LLC, C-Corporations and S-Corporations to help them with their accounting and tax needs.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

http://www.medowscpa.com

http://taxblog.medowscpa.com

info@medowscpa.com

A Unique, Boutique New York CPA Firm Serving the Needs of Individuals & Small Businesses

Congratulations on your recent acquisition of  your new small business in New York. Acquiring a small business is often an emotionally exhausting, confusing and exhilarating experience. Further, acquiring a business can put a strain on the new company’s cash flow. As Manhattan CPAs experienced in working with S-corps, C-corps and LLCs in NYC, we can advise you on ways to improve your cash flow.
One way to improve cash flow is to reduce the amount of New York income taxes your small business is currently paying. One possible way to reduce NYC income taxes is to accelerate the deduction of costs currently capitalized as acquisition related costs. Generally, professional fees and other costs associated with the purchase of a business are “capitalized” in the stock or assets that are purchased. For income tax purposes, deduction of these costs may be over 15 years, on sale of the business, or the costs may never be deducted. Because invoices often do not clearly allocate fees among all the services performed by professionals, or costs associated with travel and other miscellaneous expenses, costs that are not associated with the purchase can be capitalized as acquisition costs.

If costs unrelated to the acquisition have inadvertently been capitalized, then properly re-characterizing these costs can permit them to be deducted in the year they were incurred. Further, in certain instances, costs incurred to expand your business can be deducted over 5 years, rather than 15 years. A thorough analysis of capitalized acquisition costs often results in a significant New York tax refund and/or a decrease in the Manhattan income tax paid in the years immediately following the acquisition.

Our CPAs would like to talk to you about the potential for accelerating the deduction of some of the costs you currently have capitalized, to better help your New York City LLC, S-corp, C-corp or other small business. Please contact one of our NYC LLC CPAs at our office to arrange a convenient meeting time.

Sincerely yours,
Jonathan Medows, CPA

About us: MEDOWS CPA, PLLC is a boutique New York CPA NY Firm serving the needs of Individuals & Small Businesses in New York City and throughout the nation.  We work with the self-employed, freelancers, LLC, C-Corporations and S-Corporations to help them with their accounting and tax needs.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

http://www.medowscpa.com

http://taxblog.medowscpa.com

info@medowscpa.com

A Unique, Boutique New York CPA Firm Serving the Needs of Individuals & Small Businesses

The IRS has provided procedures for taxpayers to make changes to, from, or within a nonaccrual-experience (NAE) accounting method, and to adopt certain NAE methods. This applies in particular to S-corporations, LLCs and other small businesses operating in New York who use CPAs. The NAE methods are limited to taxpayers that use an accrual method and that:
•    provide services in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts and consulting, or
•    meet the $5 million annual gross receipts test.
A New York City small business, C-corporation, LLC or high net worth taxpayer who uses an accrual method for accounts receivable for services performed may request a change to the nonaccrual-experience method of accounting. Under this method, a taxpayer does not need to accrue any portion of the accounts receivable that on the basis of experience will not be collected.

The NAE method is unavailable if interest is charged on the amounts due or if there is any penalty for late payment. Generally, offering a discount for early payment is not regarded as charging interest or imposing penalties for late payments, if certain conditions are met. Income cannot be reported using the NAE method for activities related to lending money, selling goods, or acquiring receivables from other persons who earned the amounts through the provision of services.

The procedures apply to taxpayers that wish to:
•    change to a safe harbor NAE method; or
•    change to a period system; or
•    change from a NAE method to a specific charge-off method; or
•    change from a sub-method of its current NAE method regarding applicable periods or tracing of recoveries to another permissible sub-method; or
•    change a sub-method unrelated to the applicable period or to the tracing of recoveries for a taxpayer currently using a NAE method; or
•    change to or adopt a NAE method other than a safe harbor method provided by the IRS.

Our NYC CPAs specialize in helping LLC, S-corporations, C-corporations or other Manhattan based small businesses. If you are interested in reviewing your current collection procedures and method of accounting, please call one of our Manhattan LLC CPAs at your earliest opportunity to arrange an appointment.

About us: MEDOWS CPA, PLLC is a boutique New York CPA NY Firm serving the needs of Individuals & Small Businesses in New York City and throughout the nation.  We work with the self-employed, freelancers, LLC, C-Corporations and S-Corporations to help them with their accounting and tax needs.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

http://www.medowscpa.com

http://taxblog.medowscpa.com

info@medowscpa.com

A Unique, Boutique New York CPA Firm Serving the Needs of Individuals & Small Businesses

There have been new guidelines released by the IRS that may affect C-corporations, S-corporations, LLCs and other small businesses in New York. Keep reading to learn more about these new guidelines and how a LLC CPA in Manhattan can help.
The IRS has issued guidance for accrual basis taxpayers as to when they incur a liability for services or for insurance. If a taxpayer wants to change its treatment of liabilities to comply with this guidance, they must obtain the consent of the IRS.
Under the accrual method of accounting, which you use, a liability is incurred, and is generally taken into account for federal income tax purposes in the tax year in which:
1.    all the events have occurred that establish the fact of the liability,
2.    the amount of the liability can be determined with reasonable accuracy, and
3.    economic performance has occurred with respect to the liability (the “all events test”).
There are exceptions, such as when the amount of the accrual is immaterial, or accrual of the liability in the tax year of payment results in better matching of the liability against the income to which it relates than would result from accrual of the liability in the tax year in which economic performance occurs. This is something that a skilled CPA experienced in handling Manhattan C-corporations will be able to assist you in sorting out.

The IRS specifically addresses two situations in which an accrual basis taxpayer incurred liability for services or for insurance in the year payment was due and paid, not in the year the taxpayer executed the contract for the services or the insurance. The IRS further provides guidance on how a taxpayer can change their method of accounting for services and insurance contracts. This is also something that a CPA versed in LLCs in Manhattan can help you with.

If you have any questions regarding this guidance or compliance with the accrual method of accounting, please call one of our New York City small business CPAs at your convenience.

About us: MEDOWS CPA, PLLC is a boutique New York CPA NY Firm serving the needs of Individuals & Small Businesses in New York City and throughout the nation.  We work with the self-employed, freelancers, LLC, C-Corporations and S-Corporations to help them with their accounting and tax needs.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

http://www.medowscpa.com

http://taxblog.medowscpa.com

info@medowscpa.com

A Unique, Boutique New York CPA Firm Serving the Needs of Individuals & Small Businesses

Our Manhattan office of income tax CPAs has been receiving many questions from clients about how the 2009  Recovery act may affect retired workers. Below we will attempt to explain this, and how it will affect your taxes in NYC. The American Recovery and Reinvestment Tax Act of 2009 (2009 Recovery Act) includes provisions that benefit the New York income taxes of certain retired workers. Individuals who receive certain government pensions and annuity payments will receive a $250 credit on their Manhattan income taxes in 2009. Alternatively, economic recovery payments of $250 will be made to individuals who are eligible for certain social security benefits, Railroad Retirement benefits, veteran’s compensation or pension benefits, or supplemental security income (SSI) benefits. These provisions are coordinated with each other and with the “Making Work Pay” credit so that no individual receives a double income tax benefit.

Economic Recovery Payments for Recipients of Certain Federal Benefits. The $250 economic recovery payment is payable to eligible individuals within 120 days of February 17, 2009, the date of enactment of the 2009 Recovery Act. Eligible individuals are those who received benefits in a qualifying program during November 2008, December 2008, or January 2009; and who have an address in the United States or its possessions. A qualifying program includes:
•    Title II benefits under certain provisions of the Social Security Act,
•    Monthly annuity or pension payments payable under certain provisions of the Railroad Retirement Act of 1974,
•    Certain veteran’s compensation or pension benefits, or
•    Supplemental security income (SSI).

Government retirees may qualify for $250 credit for 2009. Some government retirees may not qualify for social security benefits, and therefore may not be eligible for the economic recovery payment on their income tax return in New York City. However, the 2009 Recovery Act includes a $250 credit for certain government retirees who receive an annuity or pension for service performed in the employ of the United States, any state, or instrumentality thereof.
Individuals who receive an economic recovery payment may not claim the credit for government retirees. In addition, if an individual is also eligible for the Making Work Pay credit (MWPC), the amount of the MWPC is reduced by the amount of the economic recovery payment and coordinated with the credit for government retirees.

If you would like to know if you qualify for this credit, and how this would affect your income taxes in New York, please call our CPAs at our Manhattan office at your convenience.

About us: MEDOWS CPA, PLLC is a boutique New York CPA NY Firm serving the needs of Individuals & Small Businesses in New York City and throughout the nation.  We work with the self-employed, freelancers, LLC, C-Corporations and S-Corporations to help them with their accounting and tax needs.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

http://www.medowscpa.com

http://taxblog.medowscpa.com

info@medowscpa.com

A Unique, Boutique New York CPA Firm Serving the Needs of Individuals & Small Businesses

It’s tough enough to find the right person to care for your child in the home, without having to worry about the New York nanny tax complications of becoming a household employer. Although the rules for nanny taxes in NYC have been liberalized in some ways, other requirements are just as stringent as they’ve always been. Here’s a snapshot of what you must do to steer clear of trouble with the IRS when you hire someone to take care of your children in the home.

Social Security and Medicare tax (FICA). If you have household workers, you are required to withhold and pay FICA taxes if cash wages paid in 2010 total $1,700 or more (this amount is unchanged from 2009 because of low inflation). As the employer, you have to report and pay the required employment taxes for these domestic employees on Schedule H (Household Employment Taxes), with the tax amount then transferring to the appropriate line on your New York  income tax Form 1040 or 1040A. Not paying the “nanny tax” is on your Manhattan income taxes is considered income tax evasion.

There is one limited FICA exception for wages paid to domestic employees who are under 18. Social security and Medicare tax doesn’t apply at all to these employees if domestic work is not their principal occupation. This exception may help with steady evening and weekend baby-sitters, but otherwise it’s not important to those parents who need help with children during the day.

Unemployment tax (FUTA). You must pay the FUTA tax for any household employee whom you pay $1,000 or more in a calendar quarter. The effective FUTA tax rate varies state-by-state. We can give you all the details on the FUTA part of you New York City nanny income taxes.

Payroll tax paperwork. The FICA and FUTA you owe for any household employee is computed on Schedule H of Form 1040 on your Manhattan income taxes and paid along with your regular  New York income tax bill. Although you are not required to make estimated tax payments for FICA and FUTA, it might be a good idea to make quarterly payments to avoid winding up with an unexpectedly large bill at tax return time.

Federal income tax withholding. Thankfully, you aren’t required to withhold federal income tax from the wages of household employees. But you are required to file a Form W-2 for every domestic employee whose wages are subject to the social security tax. And you will need to get an Employer Identification Number for yourself, which is not the same as your social security number. Although you are not required to do so, your household employee may ask you to withhold federal income tax. If you agree, you should be aware of the Making Work Pay Credit (MWPC), which is provided to employees through reduced income tax withholding in 2009 and 2010. Otherwise, the individual will claim the credit when he or she files a 2009 return in 2010 and a 2010 return in 2011.

If you pay the nanny’s share of Social Security taxes in addition to your share rather than have the nanny incur that expense, you or the nanny won’t need to pay additional  social security taxes on that amount. The nanny, however, will be considered to have additional income for New York income tax purposes.
There may be other  Manhattan tax complications as well. For example, depending on state law, many employers of even household help may have to file and pay state unemployment insurance tax for each quarter in which the state wage threshold is reached. And the rules may be somewhat different if you have other employees.
As you can see, the tax rules for child-care help are still complicated. We are in a position to advise you of the least troublesome way to take care of all your tax responsibilities. Our firm of Manhattan income tax CPAs are well versed in dealing with NYC nanny tax laws. Please do not hesitate to call  our Manhattan CPA office if we can be of assistance to you.

About us: MEDOWS CPA, PLLC is a boutique New York CPA NY Firm serving the needs of Individuals & Small Businesses in New York City and throughout the nation.  We work with the self-employed, freelancers, LLC, C-Corporations and S-Corporations to help them with their accounting and tax needs.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

http://www.medowscpa.com

http://taxblog.medowscpa.com

info@medowscpa.com

A Unique, Boutique New York CPA Firm Serving the Needs of Individuals & Small Businesses

Besides protecting your family from financial hardship, life insurance also can be an estate-planning tool to transfer large sums to your loved ones free of New York estate tax and at little or no NYC gift tax cost. This can be done using a life insurance trust. Life insurance trusts can have significant current and future use in a wide variety of individual circumstances.

Life insurance proceeds are subject to New York City estate tax if the insured owned the policy at death, or transferred it within three years of death. Even if the policy was transferred to another, an insured is considered to still own the policy if, for example, the insured possesses any of the following: the right to change the beneficiary, the right to borrow against the policy, the right to surrender the policy for its cash value, or the right to pledge the policy for a loan. In other words, all of these “incidents of ownership” in the policy must be transferred more than three years before death for the proceeds to escape being included in the insured’s estate.
If these obstacles are overcome, substantial New York estate tax savings can be realized by transferring a life insurance policy. But if you give a policy to your spouse who predeceases you, the policy’s value will be taxed in your spouse’s estate. You probably do not want to give the policy to your children either, unless they are mature and financially secure in their own right.

It is for these reasons that life insurance trusts have become such popular devices in New York. If a life insurance policy and all policy rights are transferred to an irrevocable trust, and the ex-owner survives for the next three years, the policy proceeds can escape estate tax in the surviving spouse’s estate as well as the insured’s. A trust also provides flexible settlement options. You can have the funds managed professionally, protecting beneficiaries from financial inexperience. The trustee can be given discretion to pay income in varying amounts to beneficiaries depending upon their needs and their Manhattan tax situations.

If you want to set up a life insurance trust, you also have to decide whether it should be funded or unfunded. If the trust is to be funded, you will have to transfer cash or other property to it to pay the premiums on the policy. If it is unfunded, you or someone else will have to make periodic contributions to it so that the premiums can be paid. As with any trust, there are NYC income tax and gift tax consequences that have to be planned for.

The tax-saving opportunities of life insurance trusts are so substantial that some lawmakers have called for their elimination. Nevertheless, Manhattan insurance trusts have survived the current round of budget balancing and deficit reduction, and if there are any future changes in this area, in all likelihood, they would not apply retroactively. If you are interested in setting up a trust or learning more about this technique, please don’t hesitate to call us. Our experienced New York estates and trusts CPAs will be glad to assist you.

About us: MEDOWS CPA, PLLC is a boutique New York CPA NY Firm serving the needs of Individuals & Small Businesses in New York City and throughout the nation.  We work with the self-employed, freelancers, LLC, C-Corporations and S-Corporations to help them with their accounting and tax needs.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

http://www.medowscpa.com

http://taxblog.medowscpa.com

info@medowscpa.com

A Unique, Boutique New York CPA Firm Serving the Needs of Individuals & Small Businesses

If you’re like most people, you don’t like to think about planning your New York estate. But it’s an important part of ensuring the financial security of your loved ones. One of the most common tools used in Manhattan estate planning – and one that everyone should at least give careful consideration to – is a program of giving gifts. A carefully planned gift-giving program can reduce the amount of your estate that is subject to New York tax while still passing on wealth.

Estate planning.Manhattan estate planning is always complicated but it takes on additional complexity in 2010 because of important changes in federal tax law. Technically, the federal estate tax is abolished for decedents dying after December 31, 2009 and before January 1, 2011. However, Congress is expected to revive the federal estate tax sometime in 2010 (patterned after the 2009 estate tax) and make the estate tax retroactive to January 1, 2010.

Let’s take a brief look at how the traditional New York City estate tax rules operated in 2009 and may apply again in the future. For decedents dying before January 1, 2010, their estate was entitled to an exclusion that exempts a portion of the property from the federal estate and New York tax. In 2009, the amount excluded was $3.5 million. That means that an estate of $3.5 million or less was free from federal tax.

The rules are significantly different for 2010. For decedents dying on or after January 1, 2010 and on or before December 31, 2010, the federal estate tax is abolished. In its place, are carryover basis at death rules. The NYC income tax basis of property acquired from a decedent’s estate generally must be carried over from the decedent. Executors are allowed to partially increase the basis of property by up to $1.3 million ($3 million in the case of property passing to a surviving spouse); further appreciation will be subject to New York tax when the asset is sold.

An example will help illustrate how carryover basis works: In 1997, Adam buys stock worth $150,000. Adam dies in 2010 and leaves the stock to his son, Paul. The value of the stock on the day of Adam’s death is $180,000. Under the carryover basis rules, if Paul sells the stock, he might pay tax on all the gain since 1997. In contrast, under the stepped-up basis rules, Paul can immediately sell the stock and not recognize any taxable gain because his basis in the stock “steps-up” to his father’s basis as of the date of Adam’s death.

It is unclear at this time when Congress will revive the traditional stepped-up basis rules for 2010. Indeed, Congress could do nothing, which will leave the carryover basis rules in effect for all of 2010. After 2010, the stepped-up basis rules will return but at less generous tax treatment than in 2009. Please contact our office if you have any questions about this, and how this will effect your income taxes in New York. Our office will keep you posted of developments.

Gifts. Gifts are an important component of estate planning. While large gifts are subject to gift taxation, you can give away up to $13,000 in 2010 per recipient per year free of gift tax. In addition to the annual gift tax exclusion of $13,000, you get a lifetime gift tax exclusion of $1 million. Under current law, the $1 million exclusion is permanent. Additionally, lifetime transfers between spouses are free from gift tax.
There is a great deal of flexibility in the types of property that can be transferred. Gifts that qualify for the $13,000 annual exclusion can be made in money, property such as stocks or bonds, or even a life insurance policy, as long as the recipient gets the present right to possess or use the property. The gift may be in trust if the terms of the trust give the recipient the immediate right to the property or income from the property.

You can give up to $26,000 in 2010 per recipient per year if you’re married and your spouse consents to “split” your gifts. This is useful for spouses who do not own an equal amount of property. The spouse with less property can consent to gifts made by the wealthier spouse, thereby effectively doubling the amount that the wealthier spouse can give away tax free. To take advantage of “gift splitting,” both spouses must be U.S. citizens or residents. The consent must be given on a gift tax return, so a return must be filed even if no NYC gift tax is due. However, a short form gift tax return is available.

One important thing to remember when you make a gift is that the recipient must take your basis in the property. Unlike the carryover basis rules for distributions from a 2010 estate that exempt $1.3 million in appreciated assets from carryover basis, carryover basis for lifetime gifts of property does not carry any exemption amount. What’s more, even the amount of a gift qualifying for the annual Manhattan gift tax exclusion ($13,000 or $26,000 for split gifts) is not exempt from carryover basis. This means that if the recipient sells the property, any gain on the sale will be measured using what you paid for the property, not what the property was worth when he or she received it. Consequently, choosing the right property to achieve your goals is an important aspect of any gift-giving program.

Another way to further the financial security of others without incurring  New York gift tax is by payment of medical and educational expenses. You can pay an unlimited amount for these expenses tax free as long as the payments are made directly to the medical services provider or educational institution. The person you benefit does not need to qualify as a dependent for tax purposes. Any medical expenses, however, must not be reimbursed by insurance, to either you or to the beneficiary.

If used properly, a program of gift-giving can benefit everyone involved and achieve Manhattan tax savings in your estate planning. If you have any questions about the best way of using gifts as part of your overall financial plan, please call us. Our CPAs are experienced in dealing with estates and trusts in New York and abroad.

About us: MEDOWS CPA, PLLC is a boutique New York CPA NY Firm serving the needs of Individuals & Small Businesses in New York City and throughout the nation.  We work with the self-employed, freelancers, LLC, C-Corporations and S-Corporations to help them with their accounting and tax needs.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

http://www.medowscpa.com

http://taxblog.medowscpa.com

info@medowscpa.com

A Unique, Boutique New York CPA Firm Serving the Needs of Individuals & Small Businesses

Did you know that your summer day care expenses may qualify for a NYC income tax credit? Many parents who work or are looking for work must arrange for care of their children under 13 years of age during the school vacation. Those expenses may help you get a credit on next year’s Manhattan income tax return.

Here are five facts the IRS wants you to know about a tax credit available for child care expenses in Manhattan. The Child and Dependent Care Credit is available for expenses incurred during the lazy hazy days of summer and throughout the rest of the year.

1.       The cost of day camp may count as an expense towards the child and dependent care credit.

2.       Expenses for overnight camps do not qualify.

3.       If your childcare provider is a sitter at your home or a daycare facility outside the home, you’ll get some tax benefit if you qualify for the credit.

4.       The actual credit can be up to 35 percent of your qualifying expenses, depending upon your income.

5.       You may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.

For more information check out IRS Publication 503, Child and Dependent Care Expenses. This publication is available on the IRS Web site, IRS.gov or by calling 800-TAX-FORM (800-829-3676). Or, if you would like to know how your income taxes in NYC are affected by this, feel free to contact our office of Manhattan income tax CPAs at your convenience.

About us: MEDOWS CPA, PLLC is a boutique New York CPA NY Firm serving the needs of Individuals & Small Businesses in New York City and throughout the nation.  We work with the self-employed, freelancers, LLC, C-Corporations and S-Corporations to help them with their accounting and tax needs.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

http://www.medowscpa.com

http://taxblog.medowscpa.com

info@medowscpa.com

A Unique, Boutique New York CPA Firm Serving the Needs of Individuals & Small Businesses