7 Tax Deductions Every Parent Should Know About

Catherine Donaldson-Evans for Parents.com writes:  Everyone wants to save money, and parents are no exception. But when it comes to filing taxes, did you know there are certain tax breaks that apply just for parents? Even if you feel like you're spending more than saving, having a child can actually help you save some cash during this tax season.

As much as we love our children, having kids often feels like a bottomless money pit. But there is some relief for overburdened parents.

Uncle Sam knows just how costly it is to have a baby, so there are a number of tax breaks and deductions parents can claim on their returns. Here are the ones to make sure you're covered in your taxes this year.

1. Child tax credit. Moms and dads can claim $1,000 per household child up to age 17, according to Ellie Kay, a Parents advisor for the Mom Money Clinic and a family financial expert. But once a couple's adjusted gross income is $110,000 or more (or $75,000 for single parents), that perk is no longer an option.

2. Earned income tax credit (EIC). Parents of three or more children who have earned less than $46,997 for the year if they're single or less than $52,427 if they're married can take this credit, Kay says. Very low-income parents of one or two kids can also qualify. The maximum EIC allowed is $6,143.

3. Child-care deductions and pretax accounts. Working parents who pay for child care might be able to deduct some of those costs from their taxes, according to Elisabeth Leamy, a money expert and consumer correspondent for The Dr. Oz Show. The amount is based on income and is between $600 and $1,050 in savings a year per child. For licensed day-care centers and after-school programs or qualified babysitters with social security numbers, parents can get a dependent care tax credit of up to 35 percent of the cost of that care. Keep in mind that there's a $6,000 maximum for two or more family members and a $3,000 cap per child. Another way to go, if your employer offers it as a benefit, is to put money into a flexible spending account, or FSA, for child-care costs, which allows up to $5,000 in contributions that aren't taxed. But, Leamy notes, parents can't take advantage of both an FSA and the child care credit; they have to choose one or the other.

4. Medical expenses deductions and pretax accounts. Total family health care expenses that exceed 7.5 percent of the household's adjusted gross income can be deducted from your taxes, according to Kay, including things like physical therapy and dental care but excluding insurance premiums. Or parents can invest in their employers' Health Spending Accounts (HSAs), which, like FSAs, allow pretax contributions of up to $5,000 a year.

5. College savings plan deductions. If you've opened a 529 plan account or started another state-sponsored college fund for your child, any contributions made in 2014 can be claimed as deductions on your state taxes.

6. Adoption tax credit. Parents who finalized adoptions in 2014 are eligible for up to $13,190 per child in federal tax credits. "A little caution, though: Make sure you have all the paperwork," Kay advises. "Adoptions can be drawn out, so if [the adoption] was not finalized in 2014, that could be a problem." At the very least, though, the credit would be postponed by a year.

7. Dependent tax exemption. When you're single, you can claim one exemption; when you're married, you get two; and when you have kids, you get one for each child, Leamy says. That amounts to $3,950 per person for 2014. Since this is a deduction rather than a credit, the savings is based on your tax bracket. For example, those in the 25 percent bracket will save $975 with the exemption.

6 tax breaks for pet owners

Paul Sisolak for GoBankingRates.com/ReviwJournal.com writes: Pets play an important role in our lives. We feed them, clean them, play with them and spend some of the best times of our lives with them. We provide them with all the same medical care and comforts afforded to any one of our family members. After all, our dogs, cats and other diminutive friends are no different than people, really; they’re our family, so shouldn’t it seem obvious that Fido and Rex get the same tax return breaks as their human brethren?

Animal lovers have long lobbied for a formalized, nationwide pet tax deduction policy — something to compensate for what we spend annually at the groomer, the veterinarian or the pet store.

Thousands or millions of dollars? Think again. According to The Huffington Post, Americans spend some $45 billion a year on pet care.

In 2009, a Michigan senator introduced a bill that would give pet owners up to $3,500 a year in tax refunds for “qualified pet care” costs. It was an ambitious, heavily inclusive piece of lawmaking that would’ve saved pet owners a chunk of money; unfortunately, the HAPPY Act (short for Humanity and Pets Partnered Through the Years) didn’t pass on Capitol Hill, despite a decent showing of public support.

In spite of the HAPPY Act’s demise, there are some examples of tax-deductible pet care for our four-legged friends.

Sad End to the HAPPY Act

Republican Sen. Thaddeus McCotter introduced H.R. 3501 in July 2009. McCotter had hoped that the bill, which he reportedly titled after the Rolling Stones song “Happy,” would allow people the tax write-off on their annual pet expenses they’d always wanted, but never received.

HAPPY picked up a lot of traction in the second half of 2009, garnering endorsements from most every active animal welfare group: The Humane Society of the United States, the American Society for the Prevention of Cruelty to Animals (ASPCA), the Animal Law Coalition, the American Veterinary Medical Association and the Pet Industry Joint Advisory Council, according to Forbes.

An online petition also circulated and surpassed the 30,000-signature mark in favor of the legislation.

Some animal rights activists had also said at the time that the bill was more than just a tax break. The monetary refund, they noted, would help keep animals in the home and reduce pet abandonment for families hit hard in the recession who couldn’t afford the mounting costs to care for their pets.

HR 3501 languished in the House Committee on Ways and Means and never passed, leaving pet owners around the United States without an extra $3,500 to pocket after the April tax season.

Editors of the MyPet Health Guide speculated that the HAPPY Act failed because it gave our domesticated animal kin almost too much financial leverage, too many financial breaks that people get. Plus, the timing was bad; The Huffington Post alluded that proposing benefits for animals wasn’t a priority during the peaks of the health insurance and economic crises.

“Nothing raises an accountant’s hackles more than seeing ‘four dependents’ listed on the tax return of a single man with a dog, two fish, and a ferret,” according to MyPet Health Guide.

The True Costs of Pet Ownership

Like raising children, taking care of pets can be an expensive proposition that leaves our search to save money on pet care a full-time job. Between food, checkups, health insurance and toys, it can become a true labor of love when considering what we pay each year.

Like any other household or utility bill, the costs of owning a pet add up per animal. These figures are courtesy of the ASPCA:

• Small dog: $1,314
• Medium dog: $1,580
• Large dog: $1,843
• Cat: $1,035
• Rabbit: $1,055
• Guinea Pig: $705
• Small mammal: $340
• Small bird: $270
• Fish: $235

Since no national law exists on the books, none of these expenses are deductible. And the IRS won’t budge if you try to claim your dog or cat come tax season — no matter how human your bond is.

Animal owners should listen up — your pets don’t have to be left in the tax doghouse. There are a few caveats and exceptions to the rules that might qualify you for some tax relief this season.

6 Ways to Deduct Your Pets on Your Taxes

Your family of ferrets or school of goldfish might not be tax exempt, but if you’re dead set on getting a tax refund this year, look into some of the options below. Some might sound outside the realm of the animal kingdom — your dog or cat as a business write-off, for example — but qualify, nonetheless. And it’s easier than getting a set of paw prints to sign that W-2.

1. Moving the Family Pets

No pet is an island — at least to the taxman. Pets are property like any other household belonging, and can be taxed as such if you’re relocating, since moving costs are sometimes deductible. It might sound strange to lump Rover and Checkers in with your ottoman, sofa and dining room set, but when they’re tax exempt, who’s complaining?

2. Pet Food

Is your dog or cat master of his own domain, keeping your property free of pests and unwanted vermin? Then their food comes tax-free.

Kiplinger wrote about a couple that was allowed to write off the cost of cat food used to attract feral felines on their junkyard property. The wild cats reciprocated by hunting snakes and rats on the premises, making the junkyard safer for customers. Though the peculiar case went to tax court, IRS officials agreed in the end that the nomadic ninja cats could eat tax-free.

3. Guard Dogs

When “Beware of dog” signs apply, your pet might be tax exempt, with exceptions. Fifi the poodle with a badge won’t fly with the IRS. Entrepreneur magazine said that the best tax-exempt guard dogs are the ones that look and play the part. Pit bulls or German shepherds are naturally intimidating canines with a penchant for making good watchdogs, and thus, can qualify for the tax-free club.

Your dog must also actually be guarding something, like a gated home or valuable property. In this case, it’s the dog’s services, not the dog itself, being deducted.

4. Animal Adoption Fees

It’s generally believed that donations made to nonprofits such as churches and other charities are tax deductible. This is true to an extent. Fees paid or donations made to animal shelters are not deductible — rescue organizations need initial funding to pay for operational costs like feeding the animals in their care.

Added donations, however, are technically tax free. If you’re interested in adopting a pet in need of a loving home, this is a good way to welcome a new family member and make a tax deductible gift in one.

5. Service Animals

Seeing-eye dogs and others with special training are tax exempt as per the IRS. This doesn’t mean that training your dog to fetch snacks for you while you veg out on the couch means living tax free. By law, service dogs are licensed by their owners with special documentation and neck tags from a doctor.

6. Leader of the Pack

Being a professional dog is hard work that deserves a tax break. If your pet also works in show business — think pageant presenters or agility trainers — they might be tax deductible. Experts emphasize that if your dog is a well-trained Lassie, it must be documented, business-related and a reasonable expense.

Remember, the 2015 IRS tax deadline is Wednesday, April 15, so there’s plenty of time to configure your pets into your filing schedule. You might find your relationship is full of love, and free of taxes.

Neat and QuickBooks® Online Integration (Scanning / Paper Document Management)

Nicole Odeh for Intuit  Accountant News Central writes: Paper, paper everywhere! It was the bane of my existence as a bookkeeper and financial expert.

In this profession, the goal with our clients is to get their information where it needs to be, in an easy-to-understand format that makes sense to the non-professional. This becomes wildly difficult, however, when this information is largely contained in a mess of paperwork, haphazardly shoved into a shoebox or folder straining to hold its contents.

In the Early Days of my Business

One of my first clients owned a small market that specialized in locally sourced foodstuffs. I would travel an hour to meet up IN THE MARKET, discuss how business had been and leave with an entire milk crate of bank statements, invoices, point of sale receipts, employee new hire paperwork and timesheets. All of these things and more were now in the crate, and I would have to bring them back to my office to manually enter everything in QuickBooks®and file all of the paper, in case he needed them.

Then, I stumbled upon a game changer. Discovering Neat changed my business, as my client can now get me information on a timely basis, I am able to enter it faster and more accurately, and our monthly meetings are now focused on higher-level business processes. Suddenly, my contribution to his business now holds real value!

Neat’s scanning products and software alleviated so much of the paperwork pain. By using them in my practice, I regained hours that used to be spent on more menial, tedious tasks. I no longer have to shuffle through piles of paperwork looking for one specific piece (that I hope was correctly filed), or sit in a client’s office wasting time with the tedium of scanning page after page of documents.

The company was even featured in a recent article, so you know they are doing something right!

Making my Practice Neat

The Neat line of products allowed my clients to scan from their office (no more traveling to pick up that one piece of paper you need), while the software keeps it all in a digital format that makes those hunts for a small piece of specific information a quicker and more successful proposition. By using Optical Character Recognition technology, Neat allows you to see all of these receipts from anywhere, while much of the necessary information one needs from them is already inputted.

I started to scan almost everything. There was the obvious use of inputting clients’ receipts, invoices and payroll documents, but then I started doing employee files and other documents needed for records. I just made new folders for those, and they became easily accessible. It was a different type of service I could now offer clients; not only were we increasing my ability and access to their financial records, but I was also giving them a product that meant they had to deal with less paperwork throughout all aspects of their business.

And now, it is only getting easier!

Even with the convenience of the NeatReceipts scanner I would use in a client’s office, it was still a new piece of hardware that had to be installed at their location. Most clients back then still had separate bookkeeping software, into which I had to feed this information (though this was still much easier than it used to be).

Those were small issues to be sure, but new technology has come along to even fix those!

Connecting to the Future of Accounting

Accounting professionals can now set their clients up with a NeatConnect scanner that does not need to be hardwired into an office, as it only requires a Wi-Fi connection. With that connection, it feeds information directly into Neat’s cloud service.

Imagine that! We have gone from shuffling through those shoeboxes of receipts to taking information from virtually any location and feeding it directly into a space safe from any catastrophe that could happen at home, the office or on the computer.

Not only that, but the information from Neat can also be linked directly with QuickBooks Online, removing even another time-consuming step from our workflow!

Using Neat with QuickBooks Online

You can use Neat to quickly create expense reports from your receipts, and then submit them to QBO for reimbursement. You can also match images of receipts in Neat to credit card transactions in QBO for enhanced recordkeeping. Finally, you can even send invoices in Neat as bills to be paid in QBO to stay on top of your finances.

This presents wonderful opportunities to market to new clients, especially ones who may not be anywhere close to using best processes for their business. You can now enter their establishment and show them a system that allows them to scan in all that buried paperwork and get it flowing directly into QuickBooks Online, allowing you to remotely deal with the work from there.

I know that sounds good, but it gets even better. Neat is currently offering a great deal for accountants. You can get a NeatConnect for only $299 – and that even includes a year of their premium cloud service. Click here to learn more about this opportunity to simplify your business and maximize your time.

Key Points to Remember:

• Eliminate manual data entry by automatically extracting key information with Neat.
• Integrate seamlessly with QuickBooks Online for a more efficient workflow.
• Collaborate remotely with clients by sharing files and commenting on items.
• Get started with this great savings for a limited time only.

The IRS Tax Bracket for 2015 & Standard Deduction

FileYourTaxesNow.com writes:  The IRS Tax Bracket for 2015 tax is different, yet similar to the tax bracket for 2014. Every year, the IRS adjusts more than 40 tax provisions for inflation to make sure the numbers do not get out of whack with what is going on in the economy. This is done to prevent what is called “bracket creep.” and occurs when people are pushed into higher income tax brackets or have reduced value from credits or deductions due to inflation. Tax rates often vary by tax year and may be different for each filing status. It is very important to accurately identify your filing status in order to ensure you are using the right IRS tax bracket for 2015. Specifically,  for tax year 2015, the IRS announced annual inflation adjustments for more than 40 tax provisions, including the tax rate schedules, and other tax changes. Revenue Procedure 2014-61 provides details about these annual adjustments and some of the most important changes to the tax brackets for 2015 are addressed below beginning more importantly with the tax bracket for single, married join, and head of household tax filers.

IRS Tax Bracket for 2015

Tax Rate	Single	Married/Joint & Widow(er)	Married/Separate	Head of Household
10%	$1 – $9,075	$1 – $18,150	$1 – $9,075	$1 – $12,950
15%	$9,076-$36,900	$18,151 to $73,800	$9,076 to $36,900	$12,951 to $49,400
25%	$36,901 to $89,350	$73,801 to $148,850	$36,901 to $74,425	$49,401 to $127,550
28%	$89,351 to $186,350	$148,851 to $226,850	$74,426 to $113,425	$127,551 to $206,600
33%	$186,351 to $405,100	$226,851 to $405,100	$113,426 to $202,550	$206,601 to $405,100
35%	$405,101 to $406,750	$405,101 to $457,600	$202,551 to $228,800	$405,101 to $432,200
39.6%	over $406,750	over $457,600	over $228,800	over $432,200

Furthermore, Additional 3.8% federal Medicare tax applies to individuals on the lesser of net investment income or modified AGI in excess of $200,000 (single) or $250,000 (married/filing jointly and qualifying widow(er)s). Also applies to any trust or estate on the lesser of undistributed net income or AGI in excess of the dollar amount at which the estate/trust pays income taxes at the highest rate.

IRS Standard Deduction for 2015

In addition to changes in the tax brackets for 2015, all taxpayers will see a slight bump in the standard deduction which is also adjusted for inflation. The standard deduction in 2015 rises to $6,300 for singles and married persons filing separate returns and $12,600 for married couples filing jointly, up from $6,200 and $12,400, respectively, for tax year 2014. The standard deduction for heads of household rises to $9,250, up from $9,100 in tax year 2015. Remember, that with all these values, this will be for taxes in 2015 and not for taxes in 2014. Furthermore, the personal exemption rose by $50 in 2015 to $4,000. The personal exemption is subject to a phase-out that begins with AGI of $258,250 ($309,900 for married couples filing jointly). It phases out completely at $380,750 ($432,400 for married couples filing jointly). This means that couples above these income limits will start seeing a reduction in their personal exemptions.

Other Important Tax Increases for 2015

In addition the changes in the 2015 tax bracket, there are also several other important tax increases that occurred in 2015.

• The 2015 maximum Earned Income Credit (EIC Credit) amount is $6,242 for taxpayers filing jointly who have 3 or more qualifying children that are eligible for the EITC, This is up from a total of $6,143 for tax year 2014. The IRS has information on the earned income credit and a table providing maximum credit amounts for other categories, income thresholds and phaseouts.
• The small business health care tax credit is phased out based on the employer’s number of full-time equivalent employees in excess of 10 and the employer’s average annual wages in excess of $25,800 for tax year 2015, up from $25,400 for 2014.
• Lastly, the Alternative Minimum Tax (AMT) exemption amount for tax year 2015 is $53,600 ($83,400, for married couples filing jointly). The 2014 exemption amount was $52,800 ($82,100 for married couples filing jointly). The AMT is something that taxpayers in certain taxpayers must pay. Online tax preparation software will have all the information needed to calculate returns using the updated tax bracket information for 2015.