Education Tax Credits Help You Pay for College

Education Tax Credits Help You Pay for College

Are you planning to pay for college in 2015? If so, there are two education credits that can help you with the cost of higher education. Taking advantage of these education tax credits can mean tax savings on your federal tax return by reducing the amount of tax you owe. Here are some important facts you should know about education tax credits.

American Opportunity Tax Credit:

  • You may be able to claim up to $2,500 per eligible student.
  • The credit applies to the first four years at an eligible college or vocational school.
  • It reduces the amount of tax you owe. If the credit reduces your tax to less than zero, you may receive up to $1,000 as a refund.
  • It is available for students earning a degree or other recognized credential.
  • The credit applies to students going to school at least half-time for at least one academic period that started during the tax year.
  • Costs that apply to the credit include the cost of tuition, books and required fees and supplies.

Lifetime Learning Credit:

  • The credit is limited to $2,000 per tax return, per year.
  • The credit applies to all years of higher education. This includes classes for learning or improving job skills.
  • The credit is limited to the amount of your taxes.
  • Costs that apply to the credit include the cost of tuition, required fees, books, supplies and equipment that you must buy from the school.

For both credits:

  • The credits apply to an eligible student. Eligible students include you, your spouse or a dependent that you list on your tax return.
  • You must file Form 1040A or Form 1040 and complete Form 8863, Education Credits, to claim these credits on your tax return.
  • Your school should give you a Form 1098-T, Tuition Statement, showing expenses for the year. This form contains helpful information needed to complete Form 8863. The amounts shown in Boxes 1 and 2 of the form may be different than what you actually paid. For example, the form may not include the cost of books that qualify for the credit.
  • You can’t claim either credit if someone else claims you as a dependent.
  • You can’t claim both credits for the same student or for the same expense, in the same year.
  • The credits are subject to income limits that could reduce the amount you can claim on your return.
  • Use the Interactive Tax Assistant tool at IRS.gov to see if you’re eligible to claim these education tax credits.

If you can’t claim either of these tax credits, please call the office to see if there are other education-related tax benefits that you might be able to claim.

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Starting a Business? Five Things You Must Know

Starting a new business is an exciting, but busy time with so much to be done and so little time to do it in. And, if you expect to have employees, there are a variety of federal and state forms and applications that will need to be completed to get your business up and running. That’s where a tax professional can help.

Employer Identification Number (EIN)
Securing an Employer Identification Number (also known as a Federal Tax Identification Number) is the first thing that needs to be done, since many other forms require it. EINs are issued by the IRS to employers, sole proprietors, corporations, partnerships, nonprofit associations, trusts, estates, government agencies, certain individuals, and other business entities for tax filing and reporting purposes.

The fastest way to apply for an EIN is online through the IRS website or by telephone. Applying by fax and mail generally takes one to two weeks. Please note that as of May 21, 2012 you can only apply for one EIN per day. The previous limit was 5.

State Withholding, Unemployment, and Sales Tax
Once you have your EIN, you need to fill out forms to establish an account with the State for payroll tax withholding, Unemployment Insurance Registration, and sales tax collections (if applicable).

Payroll Record Keeping
Payroll reporting and record keeping can be very time-consuming and costly, especially if it isn’t handled correctly. Also, keep in mind, that almost all employers are required to transmit federal payroll tax deposits electronically. Personnel files should be kept for each employee and include an employee’s employment application as well as the following:

Form W-4 is completed by the employee and used to calculate their federal income tax withholding. This form also includes necessary information such as address and social security number.

Form I-9 must be completed by you, the employer, to verify that employees are legally permitted to work in the U.S.

If you need help setting up or completing any tax-related paperwork needed for your business, don’t hesitate to call.

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Top Eight Accounting and Bookkeeping myths of all time

#1 Accounting is about math 

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This is only partially true, accountant uses math just about as anyone else. If you are a law and maintenance person and you charge by the hour, I am sure you need to calculate how many hours you have been at that particular location and how much you need to get paid. Well accountants look at numbers the same way. Really its more analytics then algebra accountant.

 

#2 Accountant = Tax Preparer

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A tax preparer is not necessarily an accountant, and accountant is not necessarily a tax preparer. It depends on the type of accounting you do and there are plenty of tax preparers out there that are not accountants.

 

#3 Accounting is for Men ONLY!

Portrait of happy female colleagues accounting in office

Accounting is for men only, well guys sorry but when they are starting to come into this field as a matter of fact women are starting to dominate this field little bit. Most places I’ve been, I’ve seen over 50 percent women in accounting.

 

#4 Accountants are Introverted and Boring

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Accountants are introverted and boring, Well not really I will say I have little bit more extroverted personality than some accountants. But really there’s different types of accounting, so its depends on the type  of accounting what type of accountant you are gonna get.

 

#5 Small businesses should handle their own accounting

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The fifth myth is small businesses should handle their own accounting until it gets real complex. Well normally by the time you see it as real complex it might be a little bit too late. So try to outsource your accounting and bookkeeping

 

#6 An accountant will cost you an arm and a leg

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An accountant will cost you an arm and a leg, well its only cost a leg.

Accounting depends on the type of services, if you are needing an external audit for a public company, if you need it for financial purposes. So you have to learn about the requirement of external audit.

Sometimes there’s little pricey but there are firms out there that have lower cost for smaller firms. Do your shopping around if you just need someone to come in and handle your bookkeeping.

 

#7  I don’t need an accountant to know how my business is doing

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I really don’t need an accountant to know how my business is doing. I go into company regularly and ask them how your company is doing financially. I get a lot of uh! uh! uh, till that tells me I am doing ok. No that is not, that tell you that you are doing okay, it is what you don’t know if that cash is where it should be.

It could be reinvested back into something that’s gonna be R&D and increase your business.

 

#8 I can handle my own accounting, If I have QuickBooks

Online-Exam-Preparation

The last accounting myth, I can handle my accounting I have QuickBooks. Well you may have QuickBooks but did you really set it up properly.

There are three steps too,

one, make sure it has been set up properly by the right person.

two, make sure that they have taught you how to use QuickBooks on a daily basis.

three, make sure you have someone available to ask questions if you are stuck somewhere.

 

So that was the top eight accounting myths, if you have any more questions, you are welcome to visit our website.

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Ten mistakes that nearly all business owners make

skb accounting

Everyone makes mistakes and its how we learn and new business owners are no exception to this rule.

Here are the top 10 mistakes that nearly all business owners make :

#1 – Thinking too small or too big

If you think too big, you can wind up biting off more than you can chill. Alternatively, if you think too small, you may be missing out on valuable customer opportunities. It is important to be aware how much business you can handle and position yourself for expansion.

#2 – Losing your focus or drive

Too many new business owners get caught up in the excitement of opening new business and overwork themselves too much too soon. Remember that opening a new business is a long term project and you need to stay focused. Yes you’re going to work long hours but be sure to take breaks and not overexert yourself too soon.

#3 – Taking on too much by yourself

You cannot do everything on your own and if you try to then you can lose your energy quickly. It is always a good idea to seek help of others. Such as employees or professional services. Then you can focus on your own goals and not worry about the smaller details.

#4 – Sacrificing your personality

Your business is an extension of you. As a business owner you will likely work long hours and when you are not working, you will probably still be thinking about your business. In order to make this kind of commitment you need to love your business and know that it is a part of you.

#5 – Not tracking your advertising

When you spend money to advertise your business it is important to know if your money is being spent effectively or not for example it is wasteful spending thousands of dollar for a billboard that never generates new customers. The only way to know if you’re advertising is affected is to track it.

#6 – Investing too much in one client
New business owners are often quick to rearrange their entire business structure for the first big client but make sure not to put all your eggs in one basket. Not every client will last forever and you do not want to be forced to close your business if you lose that one big client.

#7 – Going against your gut instincts

When you open a new business you will want to heed the advice of others. But do not let it overshadow your gut instincts. When all is said and done you are the business owner and you need to trust your own ideas.

#8 – Not getting involved in the community

Attending local events and becoming the active member of the community are great ways to get free attention to your business. Networking is a important part a building up good business relationship that can directly lead to customer opportunity.

#9 – Managing Employees poorly

Poor employee management can be detrimental to a new business owner.  Managing employees is not something that comes naturally to everyone and creating bad relationship with employee can create serious problems for a business owner.

#10 – Trusting that sign contracts will be honored

Although any documents that contains an agreement and signatures is technically and legally binding contract. In order to enforce it you will have to go to court.  This can cost thousands in legal and a waste of business owners valuable time. Business agreement or relationships that are based in trust. If you keep quality relationships, trustworthy client then you will not have to worry as much about what is written on paper.

Well there you have it if you make a conscious effort to avoid these common mistakes then you will find it much easier to open and operate your new business.

Start Accounting & Bookkeeping services for as low as $150 per month

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