Working grandparents who are raising grandchildren may be eligible for the Earned Income Tax Credit (EITC). This credit could put up to $6,269 in a grandparent’s pocket. To qualify, a grandparent must earn $53,505 or less for 2016 from a job or from self-employment that meets basic rules. The grandchild must also meet the dependency requirements such as be living with the grandparent. Refer to the Earned Income Tax Credit Assistant at IRS.gov for further help:
https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/use-the-eitc-assistant
Adding Payroll Management to Your Practice
Most often CPAs will argue that payroll is not a big deal and they would rather handle it themselves instead of outsourcing. However, after evaluating some of the options available they often find that they could save themselves time and money.
Many payroll companies will provide their services to the accounting industry for a very low-wholesale cost; some even provide it for free. On top of that, most will provide free HR services for CPAs and their clients. In addition, some payroll companies will even provide a free 401K. In many cases, obtaining these and similar deals on these services can be done if a CPA simply expands his or her concept on the size and ability of the tax practice and researches accordingly.
Five Tips on Whether to File a 2016 Tax Return
The IRS recently released a simple checklist to help CPA and their clients determine if a tax return must be filed. Listed below are instances the IRS provided indicating whether or not it is a good idea to file a return.
1. General Filing Rules
In most cases, income, filing status and age determine if a taxpayer must file a tax return. Other rules may apply if the taxpayer is self-employed or a dependent of another person. For example, if a taxpayer is single and under age 65, they must file if their income was at least $10,350. There are other instances when a taxpayer must file. Go to IRS.gov/filing for more information.
2. Tax Withheld or Paid
Did the taxpayer’s employer withhold federal income tax from their pay? Did the taxpayer make estimated tax payments? Did they overpay last year and have it applied to this year’s tax? If the answer is “yes” to any of these questions, they could be due a refund. They have to file a tax return to get it.
3. Earned Income Tax Credit
A taxpayer who worked and earned less than $53,505 last year could receive the EITC as a tax refund. They must qualify and may do so with or without a qualifying child. They may be eligible for up to $6,269. Use the 2016 EITC Assistant tool on IRS.gov to find out. Taxpayers need to file a tax return to claim the EITC.
4. Additional Child Tax Credit
Did the taxpayer have at least one child that qualifies for the Child Tax Credit? If they do not qualify for the full credit amount, they may be eligible for the Additional Child Tax Credit. Beginning in January 2017, by law, the IRS must hold refunds for any tax return claiming either the EITC or the Additional Child Tax Credit until Feb. 15. This means the entire refund, not just the part related to either credit.
5. American Opportunity Tax Credit
To claim the AOTC, the taxpayer, their spouse or their dependent must have been a student enrolled at least half time for one academic period to qualify. The credit is available for four years of post-secondary education. It can be worth up to $2,500 per eligible student. Even if the taxpayer doesn’t owe any taxes, they may still qualify. Complete Form 8863, Education Credits, and file it with the tax return. Learn more by visiting the Education Credits web page.
More on this checklist can be found at: https://www.irs.gov/uac/five-tips-on-whether-to-file-a-2016-tax-return
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