Top Mistake on Tax Returns in NYC

Mistakes happen in almost everything and taxes are no exception. People make mistakes when filing their tax returns. Tax time can be overwhelming to some and that allows room for mistakes. Even one mistake can alter the amount that you get back or you owe. Every line needs to be carefully filled out on a tax form and for some, it can be very confusing.

Because these forms can be confusing the say the least, you may want to hire a Manhattan CPA to file them for you. They know exactly what information goes where and you don’t have to try to figure out the meaning of the words. When finding a mistake on tax returns New York CPA is specially trained to fill out these forms correctly and they can help you out.

There are ways to prevent mistakes from happening. You need to allow yourself time to fill out these forms. If you fill out your own forms you will need to do the following:

Always double check and check your math again. The most common mistakes happen with math. You may put the wrong number in one line and that will change everything. You may also put a comma or a period in the wrong place.

Your status is also the place where people make the most mistakes. The status may be single, married filing separate, or married filing joint. Along with your status comes the line to put your social security numbers. If you don’t the right number you may another social security number belonging to someone else. Get your social security cards out and visually look at your number and then verify the number that you have on your form to make sure that they match. If you have a spouse on your tax return make sure that you verify their social security number as well.

You need to make sure that you file the right forms. Some of the most common mistakes happen when someone uses the wrong form to file their tax return. There is a reason for all of those specific forms and you need to make sure that you have the right one for you. When you need someone to look over your papers to check for a mistake on tax returns New York City CPAs know which forms you should be using..

If you file electronically on your own, you need to verify all your numbers before you click the “next” button. Even though you can go back and re-edit everything you want to avoid overlooking anything. Again, it is better if you can avoid a mistake on tax returns Manhattan CPA’s can help you file taxes correctly

Mistakes are going to happen occasionally and you can avoid your chances of making them if you find a quiet place to file your tax return. Make sure that you are not disturbed by others in your home. You want to read the question thoroughly before typing in your answer. Make sure that you have a good connection and you won’t be disconnected while you are working. Make sure that when you don’t understand something you email for help.

About us: MEDOWS CPA, PLLC is a boutique New York City Certified Public Accountant firm (CPA NYC) working with 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

New Homebuyer Tax Credit Filing Requirements:

The $8,000 (maximum) first-time homebuyer’s tax credit and the $6,500 (maximum) repeat homebuyer’s tax credit (which is available to many repeat homebuyers) are now under stricter rules. The first-time homebuyer’s tax credit must now be sent with additional documentation proving that you have purchased your home. The necessary documentation includes proof of residency, a signed mortgage statement and driver’s license.

Previously, tax payers had the ability to e-file and receive their refunds promptly. However, due to the e-file system not being able to handle the additional information, taxpayers will not be able to e-file these claims.  This will lead to an estimated four month delay in obtaining your refund. The new requirements are causing the IRS to send back amended returns and asking for the tax payers to send proof.

While the new requirements will dramatically slow the refund process, this is not the fault of the IRS. The people who are claiming the homebuyer’s tax credit under false pretences are really the ones who are responsible for the delay. In October 2009, the first person convicted of this fraud was a tax preparer who falsely claimed the first-time homebuyer’s tax credit for 15 clients.

A taxpayer can deduct college or university tuition and other educational expenses and fees as a tuition and fees deduction, a Hope or Lifetime Learning Credit, or as a business expense depending on the circumstances. Both the tuition and fees deduction and the Hope or Lifetime Learning Credits are limited by the modified adjusted gross income (MAGI) of the taxpayer or his or her spouse, if married. There is also a maximum amount that can be claimed for each type of credit, which may be phased-out or eliminated if the MAGI of the taxpayer and if married, taxpayer’s spouse is considered too high to qualify.

It is often useful to consider whether tuition and related fees such as commuting expenses, school fees, books, and supplies can be tax-deductible as a business expense off of your income tax return. If so, this deduction is reported on the Form 1040 or 1040A as an adjustment to gross income. If the educational fees can in fact be deducted as a business expense, the amount to be deducted is computed by taking 2 % of the taxpayer’s modified adjusted gross income (MAGI) and subtracting that amount from the entire applicable educational expenses and fees including tuition, commuting expenses, lodging and 50% of meals when away from home, books, and required school fees.

The criteria for determining if the educational expenses are in fact a business expense concerns whether the education is necessary to continue in the taxpayer’s current job or profession and whether it does not qualify you for a new and different profession. If the education is required to meet minimum qualifications for a job or profession it is not considered a business expense.

A legal librarian attending law school cannot consider the law school expenses as a business expense since law school qualifies her for a new profession (even though attending law school may also be beneficial to her current job.) A student in an MBA program that focuses in Accounting and prepares the student to be ready for the CPA exam cannot tax deduct the MBA or CPA expenses as the CPA is considered a minimum qualification in the public accounting profession. A marketing professional who earns an MBA and obtains a post-MBA job as an investment banker also cannot tax deduct MBA tuition and other expenses as a business expense since obtaining the degree led to a career change. In certain cases, but not all, MBA degrees can be considered tax deductible as a business expense. Also, if an employer requires an individual to take courses to maintain his or her current job, the courses are tax deductible as a business expense, unless all expenses are already paid by the employer.

It is necessary to ensure that the courses taken be used to “maintain and improve” skills necessary to a current job in order to be considered deductible as a business expense. For example, French language or French cooking classes may help an accountant entertain clients at French restaurants, but are not necessary to the accountant’s job or profession. Therefore, the French language or French cooking classes could not be tax deductible as a business expense.

If you are attending a college or university, it is a good idea to contact MEDOWS CPA, PLLC a Manhattan CPA focusing on income tax returns and Manhattan tax preparation to determine whether or not your education qualifies for any tax deductions. We can assist you in determining the most appropriate way to deduct your expenses and the optimal way to reduce your taxes owed through one or a combination of the deductions available from tuition and education-related expenses.

About us: MEDOWS CPA, PLLC is a boutique New York City Certified Public Accounting 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.