Ten Tips on a Tax Credit for Child and Dependent Care Expenses

If you paid someone to care for your child, spouse, or dependent in sacramento or auburn last year, you may qualify to claim the Child and Dependent Care Credit when you file your federal income tax return. Below are 10 things the sacramento accountant islip + company wants you to know about claiming the credit for child and dependent care expenses.

1. The care must have been provided for one or more qualifying persons. A qualifying person is your dependent child age 12 or younger when the care was provided. Additionally, your spouse and certain other individuals who are physically or mentally incapable of self-care may also be qualifying persons. You must identify each qualifying person on your tax return.

2. The care must have been provided so you – and your spouse if you are married filing jointly – could work or look for work.

3. You – and your spouse if you file jointly – must have earned income from wages, salaries, tips, other taxable employee compensation or net earnings from self-employment. One spouse may be considered as having earned income if they were a full-time student or were physically or mentally unable to care for themselves.

4. The payments for care cannot be paid to your spouse, to the parent of your qualifying person, to someone you can claim as your dependent on your return, or to your child who will not be age 19 or older by the end of the year even if he or she is not your dependent. You must identify the care provider(s) on your tax return.

5. Your filing status must be single, married filing jointly, head of household or qualifying widow(er) with a dependent child.

6. The qualifying person must have lived with you for more than half of 2011. There are exceptions for the birth or death of a qualifying person, or a child of divorced or separated parents. See Publication 503, Child and Dependent Care Expenses.

7. The credit can be up to 35 percent of your qualifying expenses, depending upon your adjusted gross income.

8. For 2011, you may use up to $3,000 of expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit. 

9. The qualifying expenses must be reduced by the amount of any dependent care benefits provided by your employer that you deduct or exclude from your income, such as a flexible spending account for daycare expenses.

10. If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer and may have to withhold and pay Social Security and Medicare tax and pay federal unemployment tax. See Publication 926, Household Employer's Tax Guide.

For more information on the Child and Dependent Care Credit, see the sacramento cpas islip + company accountants and tax return experts for sacramento tax help and expertise for your tax returns This e-mail address is being protected from spambots. You need JavaScript enabled to view it   Also see the auburn cpas islip + company accountants and tax return experts for auburn tax help and expertise for your tax returns  This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Links:

• Publication 503, Child and Dependent Care Expenses
• Publication 926, Household Employer's Tax Guide

Sacramento - IRS issues new version of tip reporting:

There is a new version of IRS, Reporting Tip Income for restaurant employees and employers. Islip + Company, CPAs in Sacramento and Auburn can help tipped employees prepare their 2011 personal income tax returns, and Islip + Company, CPAS with offices in Auburn and Sacramento can also provide useful information for employers as well. The information on “allocated tips.” These are tips that an employer assigned to an employee in addition to the tips the employee reported to the employer for the year.  An employer can only use a tip rate lower than 8% (but not lower than 2%) to figure allocated tips if the IRS approves the lower rate. Islip + Company advises Sacramento and Auburn area employees that their regular pay may not be enough for their employer to withhold all the taxes they owe on their regular pay plus their reported tips. If this happens, employees may give their employer money until the close of the calendar year to pay the rest of the taxes and avoid an underpayment of estimated tax penalty on their personal income tax return.

If employees do not give their employer enough money for taxes, the employer is instructed to apply their regular pay and any money that they give for taxes in the following order:

(1) All taxes on the employee's regular pay.

(2) Social Security and Medicare taxes, on their reported tips.

(3) Federal, state, and local income taxes on their reported tips.

Any taxes that remain unpaid can be collected by the employer from the next paycheck. 

cpa in sacramento and cpa in auburn: islip + company, tax return preparation experts with offices in sacramento and auburn california, watching out for our clients taxes and your taxes both IRS tax and FTB tax.  The well informed make better decisions...Let islip + company be your tax calculator helping you to maximize your tax returns, islip + company will find every legal item and deduct it... the legal minimum tax is the maximum you will pay at islip + company...cpas in sacramento and cpas in auburn, contact This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

1.  New Continuing Education Requirements for Preparers

Certain tax return preparers must complete 15 hours of continuing education (CE) annually beginning in 2012, and the programs must be taken from IRS-approved providers. Preparers can now find a list of IRS-approved providers on the agency’s web site.

This is to help taxpayers get qualified assistance.  Be careful you you use the cheapest is not allways the best.

islip + company, cpas sacramento tax prep experts and auburn tax prep experts, roseville and antelope too

2.  New Guidance on How to Claim Expanded Veterans Tax Credit

The IRS released guidance and forms employers can use to claim the newly expanded tax credit for hiring veterans. The IRS also announced employers will have more time to file the required certification form for employees hired on or after Nov. 22, 2011, and before May 22, 2012. The VOW to Hire Heroes Act of 2011, enacted Nov. 21,  provides an expanded Work Opportunity Tax Credit (WOTC) to businesses that hire eligible unemployed veterans and for the first time also makes the credit available to certain tax-exempt organizations.

3.  IRS Unveils Version 2.0 of Smartphone App

The IRS this week released IRS2Go 2.0, an expanded version of its Smartphone application designed to provide taxpayers easier access to practical tools and information.

4.  YouTube: IRS2Go Phone App Offers New Features

You can access videos and more with the  enhanced IRS2Go smartphone app as described in this new YouTube video.

Watch this and other videos on the IRS YouTube Channel.

5.  Treasury and IRS Issue Proposed Regulations for FATCA Implementation

The Treasury Department and the IRS issued proposed regulations for the next major phase of implementing the Foreign Account Tax Compliance Act (FATCA).

6.  New Online Tool Helps Low- and Moderate-Income Taxpayers Find Tax  Help Locations

As part of a continuing effort to improve service to taxpayers, the Internal Revenue Service announced the availability of a new online tool to help people find volunteer tax preparation assistance.

7.  Counties in Alabama Added to FEMA Disaster Areas

FEMA has added counties to the recently declared Alabama disaster areas.

8.  Technical Guidance

Revenue Procedure 2012-11 sets forth procedures for issuing determination letters and rulings on the exempt status of qualified nonprofit health insurance issuers described in Internal Revenue Code section 501(c)(29).

Notice 2012-13 provides guidance on changes to the Work Opportunity Tax Credit (WOTC) made by section 261 of the Vow to Hire Heroes Act, enacted Nov. 21, 2011. The Act adds two new categories of employees that employers can hire and be eligible to take the WOTC.  The Act also makes WOTC available to certain tax-exempt employers for first time.  The Notice also discusses alternative methods of submitting IRS Form 8850 to State Agencies.

Notice 2012-16 provides guidance as to the corporate bond weighted average interest rate and the permissible range of interest rates specified under § 412(b)(5)(B)(ii)(II) of the Internal Revenue Code as in effect for plan years beginning before 2008.  It also provides guidance on the corporate bond monthly yield curve (and the corresponding spot segment rates), and the 24-month average segment rates under § 430(h)(2).  In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under § 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008, the 30-year Treasury weighted average rate under § 431(c)(6)(E)(ii)(I), and the minimum present value segment rates under § 417(e)(3)(D) as in effect for plan years beginning after 2007.

Notice 2012-17 provides answers to frequently asked questions from employers regarding automatic enrollment, employer shared responsibility and waiting periods.

Notice 2012-18 informs State housing finance agencies participating in a specified pilot program about an alternative way to satisfy certain inspection and review responsibilities under section 1.42-5(c)(2) of the Income Tax Regulations.  The notice also invites taxpayers to comment generally on issues relating to section 1.42-5 for potential changes to those rules.

TD 9574 This document contains temporary regulations authorizing the IRS to prescribe the procedures by which certain entities may apply to the IRS for recognition of exemption from Federal income tax.

REG-135071-11 In the Rules and Regulations section of this issue of the Federal Register are temporary regulations authorizing the IRS to prescribe the procedures by which a qualified nonprofit health insurance issuer participating in the Consumer Operated and Oriented Plan program, established by the Centers for Medicare and Medicaid Services, may apply for recognition as a tax-exempt organization under the Internal Revenue Code.

islip + company, cpas sacramento tax prep experts and auburn tax prep experts, roseville and antelope too

Starting in April, most U.S. workers will no longer receive their annual Social Security benefit estimates in the mail.

Blame it on the federal budget woes and a shift to the web.

 The annual Social Security benefit statement, which contains a summary of your earnings history and estimated retirement benefits, updated annually with previous years totals, arrives about three months before the worker's birth day.

You now must get your estimate of projected retirement benefits at www.ssa.gov/estimato​r.

Essential to retirement planning

The agency began mailing annual Social Security statements to 125 million workers age 25 and older in 1999, at an annual cost of about $70 million. Last year, it mailed statements to more than 158 million Americans. Over the past decade, the annual statement has become an essential part of personal financial planning, supplying critical information about future retirement income and serving as a stark reminder of the need for personal savings to supplement those benefits.

The agency estimates it will save $30 million by suspending mailings for the remainder of the fiscal year, which ends in September, and will save an additional $60 million next year by restricting mailings to workers 60 and older.

The Fedreal Government saving money... Now that's a good thing!

Islip + Company CPAs offer personalized service to help you with these issues.

sacramento cpa and auburn cpa: islip + company, tax return preparation experts with offices in sacramento and auburn california, watching out for our clients taxes and your taxes both IRS tax and FTB tax.  The well informed make better decisions...Let islip + company be your tax calculator helping you to maximize your tax returns, islip + company will find every legal item and deduct it... the legal minimum tax is the maximum you will pay at islip + company...