Michigan will process Detroit individual income tax returns

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Beginning with the 2015 tax season, City of Detroit tax filers will be able to submit their returns electronically.  Your Detroit return will be processed along with your State of Michigan Individual Tax return.  Both resident and non-resident filers will be able to file electronically.  This should improve accuracy, allow for online notifications and faster refunds.

This is part of Detroit’s post-bankruptcy plan and will apply to the 2015 tax year and beyond.  The city should get increased revenues with the electronic filing.

For help with any income tax question call one of our offices:                                       

Plymouth 734.454.4100,    Allen Park 313.388.7180,    Grayling 989.348.4055,                           Royal Oak 248.399.7331,    Saginaw 989.782.1985,    St. Clair Shores 313.371.6600

 

 

 

Are you moving?

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If you move your home you may be able to deduct the cost of the move on your federal tax return next year. This may apply if you move to start a new job or to work at the same job in a new location. In order to deduct your moving expenses, your move must meet three requirements:

  1. Your move must closely relate to the start of work. In most cases, you can consider moving expenses within one year of the date you start work at a new job location. Additional rules apply to this requirement.
  2. Your move must meet the distance test. Your new main job location must be at least 50 miles farther from your old home than your prior job location. For example, let’s say that your old job was three miles from your old home. To meet this test, your new job must be at least 53 miles from your old home.
  3. You must meet the time test.  You must work full-time at your new job for at least 39 weeks the first year after the move. If you’re self-employed, you must also meet this test. In addition you must work full-time for a total of at least 78 weeks during the first two years at the new job site. If your tax return is due before you meet the time test, you can still claim the deduction if you expect to meet it.

See Publication 521, Moving Expenses, for more information about the rules.

If you qualify for this deduction, here are a few more tips from the IRS:

  • Travel.  You can deduct certain transportation and lodging expenses while moving. This applies to costs for yourself and other household members while moving from your old home to your new home. You may not deduct your travel meal costs.
  • Household goods and utilities.  You can deduct the cost of packing, crating and shipping your property. This may include the cost to store or insure the items while in transit. You can deduct the cost to disconnect or connect utilities at your old and new homes.
  • Expenses you can’t deduct.  You may not deduct:
    • Any part of the purchase price of your new home.
    • The cost of selling your home.
    • The cost of breaking or entering into a lease.

See Publication 521 for more examples.

  • Reimbursed expenses.  If your employer later pays you for the cost of a move that you deducted on your tax return, you may need to include the payment as income. You must report any taxable amount on your tax return in the year you get the payment.
  • Address change.  When you move, make sure to update your address with the IRS and the U.S. Post Office. To notify the IRS, file Form 8822, Change of Address.

For help with any income tax question call one of our offices:

Plymouth 734.454.4100,   Allen Park 313.388.7180,   Grayling 989.348.4055,                             Royal Oak 248.399.7331,   Saginaw 989.782.1985,   St. Clair Shores 313.371.6600

Do you have Damaged Money?

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What Do We Mean By Damaged Money or Mutilated Currency?

Mutilated currency is currency which has been damaged to the extent that:

Its condition is such that its value is questionable and the currency must be forwarded to the Bureau of Engraving and Printing for examination by trained experts before any redemption is made. One example of mutilated currency may be bills missing relevant security features.

Currency can become mutilated in any number of ways. The most common causes are: fire, water, chemicals, and explosives; animal, insect, or rodent damage; and petrification or deterioration by burying.

Free Public Service

The BEP redeems mutilated currency as a free public service.  Lawful holders of mutilated currency may receive a redemption at full value when:

  • Clearly more than 50 percent of a note identifiable as United States currency is present, along with sufficient remnants of any relevant security feature and clearly more than one-half of the original note remains; or,
  • Fifty percent or less of a note identifiable as United States currency is present and the method of mutilation and supporting evidence demonstrate to the satisfaction of the Treasury that the missing portions have been totally destroyed.

Every year the Treasury Department handles approximately 30,000 claims and redeems mutilated currency valued at over $30 million. Your money is important. However, please know that heavy volume and the precise nature of the work may result in lengthy wait times. Please follow the submission instructions carefully to help us process your claim in the most efficient manner.

For help with any tax question call one of our offices:

Plymouth 734.454.4100,    Allen Park 313.388.7180,    Grayling 989.348.4055,                           Royal Oak 248.399.7331,    Saginaw 989.782.1985,    St. Clair Shores 313.371.6600

Three Ways to Maintain Good Credit

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Your credit history is your financial reputation. And just like your professional and personal reputations, your credit history takes many years to cultivate, can be easily damaged, and will follow you the rest of your life.

Maintaining good credit is important. Nearly everyone will need to borrow money from a lender at some point — say, for buying a car —  and your credit history determines whether you qualify for a loan and, if you do, what interest rate you pay. It can make or break your application for a credit card. A prospective landlord can check it to judge whether you’ll be a responsible tenant. Potential employers may request your credit reports to see if there are any red flags.

Luckily, many resources are available to help you learn how to successfully establish — and maintain — a healthy financial reputation. Here are three tips for creating a stable foundation for good credit.

  1. Monitor your credit reports.

Understanding your financial habits — such as payment history and spending patterns — can help you improve them! Your score is generally based on information in your credit reports. Mistakes on your credit reports could hurt your credit score, so check them regularly. Make sure to check that your reports don’t contain any errors, such as incorrect contact information, closed accounts listed as open, or an item like an unpaid debt listed twice.

If you find something wrong in a credit report, you should contact both the credit reporting agency that produced it and the creditor that provided the information.

  1. Pay your bills on time.

This is one of the simplest ways to keep your credit score strong — yet, with the bustle of everyday life, it can be easy to lose track of time and miss payment deadlines. Set up auto-payments or electronic reminders to ensure that you won’t be hit with late-payment penalties. Paying bills late can hurt your credit score, which in turn can raise your interest rate — meaning that you’re out even more money.

It’s a common misconception that the best way to improve a credit score is to pay off all of your accounts and close them. Get up to speed on your payments and stay on schedule, but be careful when closing accounts. Doing so eliminates some of the credit available to you, making balances appear higher when compared with the combined credit limit of all of your accounts. Also, if you managed an account well and made payments on time, closing it will remove all the positive benefits of your responsible credit behavior on your reports and score.

  1. Don’t get close to your credit limit.

Credit scoring models look at how close you are to being “maxed out,” so keep your balances low in proportion to your overall credit. Experts advise keeping your use of credit to no more than 30 percent of your total credit limit. That means that if you have $12,000 of available credit on one open account, you shouldn’t use more than $3,600.

You can decrease your credit utilization ratio over time by paying as much of your credit card balance as possible each month. If you can, pay more than the minimum balance due; this will increase your available credit and decrease your utilization ratio faster.

Just like a shining professional reputation can take you far in your career, your credit score can make or break your financial status. To learn more about how to establish a stellar financial reputation, go to FinancialProtection.USA.gov.

For help with any income tax question call one of our offices:

Plymouth 734.454.4100,    Allen Park 313.388.7180,    Grayling 989.348.4055,                           Royal Oak 248.399.7331,    Saginaw 989.782.1985,    St. Clair Shores 313.371.6600

Key Tax Tips on the Tax Effects of Divorce or Separation

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Income tax may be the last thing on your mind after a divorce or separation. However, these events can have a big impact on your taxes. Alimony and a name change are just a few items you may need to consider. Here are some key tax tips to keep in mind if you get divorced or separated.

  • Child Support.  If you pay child support, you can’t deduct it on your tax return. If you receive child support, the amount you receive is not taxable.
  • Alimony Paid.  If you make payments under a divorce or separate maintenance decree or written separation agreement you may be able to deduct them as alimony. This applies only if the payments qualify as alimony for federal tax purposes. If the decree or agreement does not require the payments, they do not qualify as alimony.
  • Alimony Received.  If you get alimony from your spouse or former spouse, it is taxable in the year you get it. Alimony is not subject to tax withholding so you may need to increase the tax you pay during the year to avoid a penalty. To do this, you can make estimated tax payments or increase the amount of tax withheld from your wages.
  • Spousal IRA.  If you get a final decree of divorce or separate maintenance by the end of your tax year, you can’t deduct contributions you make to your former spouse’s traditional IRA. You may be able to deduct contributions you make to your own traditional IRA.
  • Name Changes.  If you change your name after your divorce, notify the Social Security Administration of the change. File Form SS-5, Application for a Social Security Card. You can get the form on SSA.gov or call 800-772-1213 to order it. The name on your tax return must match SSA records. A name mismatch can delay your refund.

Health Care Law Considerations

  • Special Marketplace Enrollment Period.  If you lose your health insurance coverage due to divorce, you are still required to have coverage for every month of the year for yourself and the dependents you can claim on your tax return. Losing coverage through a divorce is considered a qualifying life event that allows you to enroll in health coverage through the Health Insurance Marketplace during a Special Enrollment Period.
  • Changes in Circumstances.  If you purchase health insurance coverage through the Health Insurance Marketplace you may get advance payments of the premium tax credit in 2015. If you do, you should report changes in circumstances to your Marketplace throughout the year. Changes to report include a change in marital status, a name change and a change in your income or family size. By reporting changes, you will help make sure that you get the proper type and amount of financial assistance. This will also help you avoid getting too much or too little credit in advance.
  • Shared Policy Allocation. If you divorced or are legally separated during the tax year and are enrolled in the same qualified health plan, you and your former spouse must allocate policy amounts on your separate tax returns to figure your premium tax credit and reconcile any advance payments made on your behalf. Publication 974, Premium Tax Credit, has more information about the Shared Policy Allocation.

For help with any income tax question call one of our offices:

Plymouth 734.454.4100,    Allen Park 313.388.7180,    Grayling 989.348.4055,                           Royal Oak 248.399.7331,    Saginaw 989.782.1985,    St. Clair Shores 313.371.6600

Don’t Fall for New Tax Scam Tricks by IRS Posers

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Tax scammers work year-round. The IRS advises you to stay alert to protect yourself against new ways criminals pose as the IRS to trick you out of your money or personal information. These scams first tried to sting older Americans, newly arrived immigrants and those who speak English as a second language. The crooks have expanded their net, and now try to swindle virtually anyone. Here are several tips from the IRS to help you avoid being a victim of these scams:

  • Scams use scare tactics.  These aggressive and sophisticated scams try to scare people into making a false tax payment that ends up with the criminal. Many phone scams use threats to try to intimidate you so you will pay them your money. They often threaten arrest or deportation, or that they will revoke your license if you don’t pay. They may also leave “urgent” callback requests, sometimes through “robo-calls,” via phone or email. The emails will often contain a fake IRS document with a phone number or an email address for you to reply.
  • Scams use caller ID spoofing.  Scammers often alter caller ID to make it look like the IRS or another agency is calling. The callers use IRS titles and fake badge numbers to appear legit. They may use online resources to get your name, address and other details about your life to make the call sound official.
  • Scams use phishing email and regular mail.  Scammers copy official IRS letterhead to use in email or regular mail they send to victims. In another new variation, schemers provide an actual IRS address where they tell the victim to mail a receipt for the payment they make. All in an attempt to make the scheme look official.
  • Scams cost victims over $20 million.  The Treasury Inspector General for Tax Administration, or TIGTA, has received reports of about 600,000 contacts since October 2013. TIGTA is also aware of nearly 4,000 victims who have collectively reported over $20 million in financial losses as a result of tax scams.

The real IRS will not:

  • Call you to demand immediate payment. The IRS will not call you if you owe taxes without first sending you a bill in the mail.
  • Demand that you pay taxes and not allow you to question or appeal the amount that you owe.
  • Require that you pay your taxes a certain way. For instance, require that you pay with a prepaid debit card.
  • Ask for credit or debit card numbers over the phone.
  • Threaten to bring in police or other agencies to arrest you for not paying.

If you don’t owe taxes or have no reason to think that you do:

  • Do not provide any information to the caller. Hang up immediately.
  • Contact the Treasury Inspector General for Tax Administration. Use TIGTA’s “IRS Impersonation Scam Reporting” web page to report the incident.
  • You should also report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” in the notes.

For help with any income tax question call one of our offices:

Plymouth 734.454.4100,    Allen Park 313.388.7180,    Grayling 989.348.4055,                           Royal Oak 248.399.7331,    Saginaw 989.782.1985,    St. Clair Shores 313.371.6600

Tax Tips for Starting a Business

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When you start a business, a key to your success is to know your tax obligations. You may not only need to know about income tax rules, but also about payroll tax rules. Here are five IRS tax tips that can help you get your business off to a good start.

  1. Business Structure. An early choice you need to make is to decide on the type of structure for your business. The most common types are sole proprietor, partnership and corporation. The type of business you choose will determine which tax forms you will file.
  2. Business Taxes.  There are four general types of business taxes. They are income tax, self-employment tax, employment tax and excise tax. In most cases, the types of tax your business pays depends on the type of business structure you set up. You may need to make estimated tax payments. If you do, use IRS Direct Pay to pay them. It’s the fast, easy and secure way to pay from your checking or savings account.
  3. Employer Identification Number. You may need to get an EIN for federal tax purposes. Search “do you need an EIN” on IRS.gov to find out if you need this number. If you do need one, you can apply for it online.
  4. Accounting Method. An accounting method is a set of rules that you use to determine when to report income and expenses. You must use a consistent method. The two that are most common are the cash and accrual methods. Under the cash method, you normally report income and deduct expenses in the year that you receive or pay them. Under the accrual method, you generally report income and deduct expenses in the year that you earn or incur them. This is true even if you get the income or pay the expense in a later year.
  5. Employee Health Care. The Small Business Health Care Tax Credit helps small businesses and tax-exempt organizations pay for health care coverage they offer their employees. A small employer is eligible for the credit if it has fewer than 25 employees who work full-time, or a combination of full-time and part-time. The maximum credit is 50 percent of premiums paid for small business employers and 35 percent of premiums paid for small tax-exempt employers, such as charities.

The employer shared responsibility provisions of the Affordable Care Act affect employers employing at least a certain number of employees (generally 50 full-time employees or a combination of full-time and part-time employees). These employers’ are called applicable large employers. ALEs must either offer minimum essential coverage that is “affordable” and that provides “minimum value” to their full-time employees (and their dependents), or potentially make an employer shared responsibility payment to the IRS. The vast majority of employers will fall below the ALE threshold number of employees and, therefore, will not be subject to the employer shared responsibility provisions.

Employers also have information reporting responsibilities regarding minimum essential coverage they offer or provide to their fulltime employees.  Employers must send reports to employees and to the IRS on new forms the IRS created for this purpose.

For help starting a business or with any income tax question call one of our offices:                                       

Plymouth 734.454.4100,    Allen Park 313.388.7180,    Grayling 989.348.4055,                           Royal Oak 248.399.7331,    Saginaw 989.782.1985,    St. Clair Shores 313.371.6600

 

 

Review Your Taxes Now to Prevent a Surprise Next Spring

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Each year, many people get a larger refund than they expected. Some find they owe a lot more tax than they thought they would. If this happened to you, review your situation to prevent another tax surprise. Did you marry? Have a child? Have a change in income? Some life events can have a major effect on your taxes. You can bring the tax you pay closer to the amount you owe. Here are some key IRS tips to help you come up with a plan of action:

  • New Job.   When you start a new job, you must fill out a Form W-4, Employee’s Withholding Allowance Certificate and give it to your employer. Your employer will use the form to figure the amount of federal income tax to withhold from your pay. Use the IRS Withholding Calculator on IRS.gov to help you fill out the form. This tool is easy to use and it’s available 24/7.
  • Estimated Tax.  If you earn income that is not subject to withholding you may need to pay estimated tax. This may include income such as self-employment, interest, dividends or rent. If you expect to owe a thousand dollars or more in tax, and meet other conditions, you may need to pay this tax. You normally pay it four times a year. Use the worksheet in Form 1040-ES, Estimated Tax for Individuals, to figure the tax.
  • Life Events.  Check to see if you need to change your Form W-4 or change the amount of estimated tax you pay when certain life events take place. A change in your marital status, the birth of a child or buying a new home can change the amount of taxes you owe. In most cases, you can submit a new Form W–4 to your employer anytime.
  • Changes in Circumstances.   If you are receiving advance payments of the premium tax credit, it is important that you report changes in circumstances, such as changes in your income or family size, to your Health Insurance Marketplace. You should also notify the Marketplace when you move out of the area covered by your current Marketplace plan. Advance payments of the premium tax credit help you pay for the insurance you buy through the Health Insurance Marketplace. Reporting changes will help you get the proper type and amount of financial assistance so you can avoid getting too much or too little in advance.

For help with any income tax question call one of our offices:                                               Plymouth 734.454.4100,    Allen Park 313.388.7180,    Grayling 989.348.4055,                           Royal Oak 248.399.7331,    Saginaw 989.782.1985,    St. Clair Shores 313.371.6600

Heatstroke deaths are 100 percent preventable

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With temperatures soaring across the country, the NHTSA urges everyone to remember that heatstroke can be deadly to kids left in hot cars. Heatstroke is the leading cause of death for children under 14 in motor vehicle incidents  (other than crashes) . There have already been 10 deaths in 2015. Follow these tips to prevent heatstroke:

  • Never leave an infant or child unattended in a vehicle, even if the windows are partly open, or the engine is running and the air conditioning is on.
  • Don’t let children play in an unattended vehicle.
  • Make a habit of looking in the vehicle before locking the door and walking away.
  • Take steps to remember not to leave a child in a vehicle by leaving a note or placing a purse or briefcase in the back seat.
  • If you see a child alone in a vehicle, call 911 or your local emergency number immediately. If they are in distress due to heat, get them out as quickly as possible.

For help with any tax question call one of our offices:                                       

Plymouth 734.454.4100,    Allen Park 313.388.7180, Grayling 989.348.4055,                           Royal Oak 248.399.7331,    Saginaw 989.782.1985,    St. Clair Shores 313.371.6600

 

Five Tax Tips about Hobbies that Earn Income

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Millions of people enjoy hobbies. They can also be a source of income. Some of these types of hobbies include stamp or coin collecting, craft making and horse breeding. You must report any income you get from a hobby on your tax return. How you report the income is different than how you report income from a business. There are special rules and limits for deductions you can claim for a hobby. Here are five basic tax tips you should know if you get income from your hobby:

  1. Business versus Hobby.  A key feature of a business is that you do the activity to make a profit. This differs from a hobby that you may do for sport or recreation. There are nine factors to consider when you determine if you do the activity to make a profit. Make sure you base your decision on all the facts and circumstances of your situation. Refer to Publication 535, Business Expenses to learn more. You can also visit IRS.gov and type “not-for-profit” in the search box.
  2. Allowable Hobby Deductions.  You may be able to deduct ordinary and necessary hobby expenses. An ordinary expense is one that is common and accepted for the activity. A necessary expense is one that is helpful or appropriate. See Publication 535 for more on these rules.
  3. Limits on Expenses.  As a general rule, you can only deduct your hobby expenses up to the amount of your hobby income. If your expenses are more than your income, you have a loss from the activity. You can’t deduct that loss from your other income.
  4. How to Deduct Expenses.  You must itemize deductions on your tax return in order to deduct hobby expenses. Your costs may fall into three types of expenses. Special rules apply to each type. See Publication 535 for how you should report them on Schedule A, Itemized Deductions.
  5. Use IRS Free File.  Hobby rules can be complex. IRS Free File can make filing your tax return easier. IRS Free File is available until Oct. 15. If you make $60,000 or less, you can use brand-name tax software. If you earn more, you can use Free File Fillable Forms, an electronic version of IRS paper forms. You can only access Free File through IRS.gov.

For help with any income tax question call one of our offices:                                               Plymouth 734.454.4100,    Allen Park 313.388.7180,    Grayling 989.348.4055,                           Royal Oak 248.399.7331,    Saginaw 989.782.1985,    St. Clair Shores 313.371.6600