IRS Summertime Tax Tip 2014-15: Five Basic Tax Tips about Hobbies

IRS Summertime Tax Tip 2014-15: Five Basic Tax Tips about Hobbies by The IRS.gov Internal Revenue Service (IRS) sent this bulletin at 08/06/2014 07:30 AM EDT

Are you really running a business, or is this just a hobby? There is a long list of things to consider before being sure someone is a business: One of the nine items to think about is, "...

• Whether you depend on income from the activity for your livelihood." 

If a person requires assistance to survive, even though they depend on an activity for income, it is possibly not enough to consider the activity a business. 

There are many other things to consider:

Straight from the Internal Revenue Service (IRS), are some resources and ways to find out if you have a business, or a hobby.  The best resource to start with is PUB 535 (2013) Business Expenses (HTML link), or Pub 535 (PDF link)

If you are a business, and wonder about legit deductions, here is a helpful video from the I.R.S. 

Simplified Home Office Deduction, IRS.gov Videos - YouTube

Some hobbies are very expensive, and taxpayers may be stunned to learn that the 100K they won from the bass tournament is only deductible up to the amount laid out to be eligible to fish in a tournament with grand prizes
. 
With a business, the owner may often deduct many expenses that have been laid out to get the business going. This is in earnest hope and planning that the business will be taking in more than it loses, at least three out of the five prior years. If it does not, the business may be reclassified as a hobby.

ASL: Small Business Health Care Tax Credit (Captions & Audio), IRS - YouTube

When that happens: the financial lay-out may have been substantial, with continuing expenses, but once classified as a hobby, they may deduct expenses only up to and equal to any amounts earned.

This is a link to the U.S. Treasury, the place where tax money is processed. The I.R.S. is just a giant clearing house for the Treasury. It is the Treasury who enforces tax code. Here is a link to a definition by the IRS in agreement with the U.S Treasury "What Constitutes A Business?" 

 Like gambling, if you never win, it is just loss, and not deductible.

For those who are businesses, I hope you find this information useful. Thank you. 

USA.gov Update: 2014 State Sales Tax Holidays

USA.gov Update: 2014 State Sales Tax Holidays from USA.gov "Updates: 2014 Sales Tax Holidays"

Good news folks, it seems shoppers / consumers in the States of lower North America, may benefit from a sales tax holiday! It is getting close to back-to-school time, some nearer than others, so it appears that many States join in to help parents, and retailers get ready for school, and give them a day, weekend or longer to make purchases, without having to pay sales tax. 

States who participate are likely to see increased sales figures, because sometimes just a few dollars in savings, can help a parent provide more for their students. 

MA State Senators Michael Knapik, Stephen Brewer discuss holiday sales tax - YouTube

    Published on Jul 23, 2014

State Senators Michael Knapik, R-Westfield and Stephen Brewer, D-Barre, speak on the Senate floor after a long debate over the sales tax holiday, which passed 28-9

The link to the chart which shows participating States is in the linked article at the top. If you want to pop this up real quick, the link is 2014 Sales Tax Holiday. There are only 17 States which participate, and some of them come and go. This would be a nice thing for other States to participate in.

I live in Arkansas, and clicking on the DFA - (Department of Finance & Admin) Sales Tax Holiday. From this page and link: 

"2014 Sales Tax Holiday
Beginning at 12:01 a.m. on Saturday August 2, 2014, and ending at 11:59 p.m. on Sunday August 3, 2014, the State of Arkansas will hold its sales tax holiday allowing shoppers the opportunity to purchase certain School Supplies, School Art Supplies, School Instructional Materials, and clothing free of state and local sales or use tax. 
All retailers are required to participate and may not charge tax on items that are legally tax-exempt during the Sales Tax Holiday."

The itemized list of items tax free can be found on the DFA's website as well: DF&A - 2014 Itemized List. Arkansas 

Please spread the word for your friends, neighbors and loved ones. Thank you for all of the good you do.  

IRS Summertime Tax Tip 2014-08: Top Ten Tax Facts if You Sell Your Home

IRS Summertime Tax Tip 2014-08: Top Ten Tax Facts if You Sell Your Home

Remember, that if your tax situation is complicated, it is advisable to get professional taxpayer assistance. Make sure the person doing your tax return is certified, and is in good standing. Unfortunately the tax payer is responsible for his / her tax return, even if the person doing it, erred. 

Getting ready to sell your home, or have you already done so in tax year 2014? The following are some tips that you may want to know come tax time.

• Capital Gains Taxes - A capital gain happens when a taxpayer sells something for more than they paid for it. 

1. Exceptions to Capital Gains Taxes on the Sale of the taxpayers Primary residence:

        a. Must have used as primary residence at least 2 out of the 5 years before the sale.

        b. The gain of $250,000.00 or less can be excluded for tax purposes. ($500,000) for MFJ [Married 

Filing Jointly] returns. 

The $250G/$500G is not the Sale Price, but the Gain gotten over and above the original purchase price.

Publication 523, from the I.R.S. gives the special qualifications and rules for those selling their homes. Included are special rules for some persons with Disabilities and Service Persons.

"Selling Your Home" - YouTube - IRS Videos

Many may not realize the I.R.S. has information in multiple languages: In Espanol:

"Venta de Su Casa" - YouTube - IRS Videos

and...

ASL: Selling Your Home (Captions & Audio) - YouTube - IRS Videos

Having said all of that, more good news, if your Gain is Not Taxable, you may not be required to report the sale to the I.R.S.

Other news: If the taxpayer decides not to take the exemption, or if any part of the sale is a gain, they may be required to claim it on their taxes. Here is a link to "Questions and Answers on the Net Investment Income Tax."

• First Time Homebuyer Credit - Exception(s): There may be special rules regarding the sale of that home. Check Publication 523, to find out what they are.

Important note about the Premium Tax Credit. If you receive advance payment of the Premium Tax Credit in 2014 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 provide financial assistance to 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.

Reporting Changes To The Marketplace As They Happen: Pub 5152: English
Reporting Changes To The Marketplace As They Happen: Pub 5152: Spanish 

Selling Your Home - Podcast: English
Selling Your Home - Podcast: Spanish

Premium Tax Credit - Podcast: English
Premium Tax Credit - Podcast: Spanish

IRS Summertime Tax Tip 2014-07: Special Tax Benefits for Members of the Armed Forces

IRS Summertime Tax Tip 2014-07: Special Tax Benefits for Members of the Armed Forces

Lately we have not heard much good news for our military members. The following are some key facts that taxpayers who serve, or have served within this tax year (2014), may not know. 

There are some tax breaks, and other rules that affect Active Military, ROTC, Reservists, and those leaving the service to go into civilian, that military tax filers may not know. 

Publication 3 is "The Armed Forces Tax Guide." Within this guide is important information for U.S. Military Taxpayers who are stateside, and around the world.

Some breaks for our Military personnel include:

• If you leave the military to find work, you may be able to deduct some job seeking expenses. Some moving expenses may be deductible as well. 
• Most military bases offer Free Tax Assistance during tax season, but there are some that offer help all year long. 
• Active duty ROTC pay is taxable, but there are some allowances during training that are not taxable. For more information, check the quick "Life Cycle" Series Fact Sheet.
• For Reservists traveling over 100 miles from home, who incur unreimbursed travel expenses, they may be deductible.
• Joint Returns - Signing a joint tax return, when one member of the couple is on active duty, may give an allowance for the active military member, to waive a signature. In some cases a Power of Attorney should be in place.
• If you are out-of-pocket expenses for uniforms you may NOT wear when off duty; cleaning and purchase costs may be deductible.
• Active Military personnel may be eligible for automatic extensions for time to file tax returns
• If you serve in an active Combat Zone, certain pay may NOT be Taxable, and may not need to be included as income on your tax return, BUT
• Active Military may want to check and see if adding it to the non-taxable income section of your tax return would give a higher Earned Income Credit allowance.

Always seek the help of a certified Tax Expert who is classified as an Enrolled Agent or higher, for very complicated returns. 

Some States also have Tax Credits, Allowances and Exclusion for Military personnel, so don't forget to check that, or make sure your tax professional checks this for you.

For answers to more military tax returns, order a copy of Publication 3.

I.R.S. en Espanol

Thank you for your service, and all you do.

HCTT-2014-14 -- IRS.gov has information about the health care law and its effect on your taxes

HCTT-2014-14 -- IRS.gov has information about the health care law and its effect on your taxes

U.S. Taxpayers are frequently being given erroneous or completely untrue information regarding the Affordable Care Act (ObamaCare), and taxes. 

As of March 31, 2014, taxpayers who lived in States with expanded Medicaid were required to have insurance, or register for Health Care. 

It is sad and unfortunate that in many of the States, even where Medicaid was expanded, there are daily untruths, and propaganda being aired on News Stations, and Newspapers. Most of this is being paid for by Teabagger GOP, and propagated by Republicans who continue to act as if they lie long enough, it will become everyone's truth.

Come tax time, 2015 - when the filing for 2014 tax returns, the individuals and families who are going to get a rude awakening, will not have their GOP representatives to pay their fines for not complying with the law. It is my personal opinion (not shared by my employer or any other party in my area), that those who continue to lie, who are causing Americans to pass up benefits that they are entitled to, should be sued in a very large way. It is criminal enterprise, to brainwash people to give up those things that are in their best interest. 

Individual Shared Responsibility - Overview - IRS - YouTube

For those who are wanting to get to the fact of the matter, the IRS has several links to help taxpayers sort it out. There is a whole page dedicated to the ACA (ObamaCare) Tax Rules and Instructions at http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions-Home another shorter resource is the IRS-pdf p5093 http://www.irs.gov/pub/irs-pdf/p5093.pdf.

Some Good News for those who may have missed Open Enrollment due to any number of reasons, if you have had a "Change of Life" Experience, ie; Lost a Job, Got Married, Widowed, Increase or decrease in income, you will be allowed to Enroll in the ACA plan(s) available in your State. [If that State expanded Medicaid]. Here is the link to the Health Insurance Market Place: https://www.healthcare.gov/

The thing I will never understand about the TeaBagger movement is how billionaires convinced basically poverty ridden populations to be activists for them??????? This is what I consider shooting off your nose to spite your face. It doesn't make sense, and it is a no win situation. 

Please enroll for Healthcare if you have not, and you are able to enroll due to changes in circumstances. Don't get your tax information from the News Media. Go to the I.R.S. website or an Enrolled Agent or higher for real tax advice.

IRS Special Edition Tax Tip 2014-16: Get Credit for Child and Dependent Care This Summer

IRS Special Edition Tax Tip 2014-16: Get Credit for Child and Dependent Care This Summer

Announcement from the I.R.S. June 11, 2014 (link above)

Now that the kiddos are out of school, there is that little relief that you no longer have to wait in long lines to drop the children off, but they will probably need oversight while you or your spouse work, or look for work.

 Having to pay day care during the off-school months can hit an already tight budget hard. It will be a big help to at least receive tax credits for amounts paid during the 2014 tax year.

Summer daycare for dependents, which counts children under 13 years old, and any other Qualifying Dependent, who is your dependent or would be your dependent. 

• Perhaps your elderly father lives with you. You house him over 6 months of the year, you help him buy and attain medicine, take him to the doctor, help him with hygiene, etc. He would qualify as your dependent, except he receives gross income of more than $3,900.00; not enough to survive on, but too much to be rated as a dependent. If you have to take him to daycare, or hire someone to come to your home to watch him, those payments may be eligible for the Child & Dependent Care Credit.

Summer Day Camps and Tax Credits by danielstoica.com

Example 1: Say you have a 5 year old son, and a 16 year old son. You decide to pay your son to watch his younger brother during the summer, while you work, and your deadbeat husband "looks for work." This may be the best arrangement you can afford, but you would not be able to claim the Child & Dependent Care for those payments.

Example 2: Your deadbeat husband finally got run over by a reindeer, and lived, but he is just a vegetable. You have two dependent children, ages 4 and 7. Your payments made to a Qualifying Provider (who must give a SSN/or an EIN) for care while you work are probably eligible for the credit, because your Spouse is incapable of caring for the children.

Example 3: In order to take up the slack of having to pay for Child Care all summer, you enroll them in camp for two weeks solid, thinking that you can deduct the cost of the "Over Night" Camp as Child and/or Dependent Care. You would not be eligible for the credit in this case.

IRS.gov Child & Dependent Care Expenses - YouTube

.
If you are counting on the Child and Dependent Care Credit for your 2014 taxes, make sure to follow all of the rules. Keep good records, and reciepts for all monies paid out. 

Good Luck, Happy Summer, and don't forget to sign up for Summer Reading Programs -2014.

Free File IRS.Gov - Spread The Word

For taxpayers who earned under $58,000.00 annually, there are a lot of partner sites that can be accessed from The IRS Website www.irs.gov. The video below is an excellent informational piece for those who have been hesitant, or just not sure how to go to a trusted site with which to trust your tax information. 

An experienced tax expert, I have CPE credits for classes completed such as "Navigating The IRS Website." Personally, I have used several different partner software providers who are linked to the Free File program on the IRS.gov website. 

If your State has State Tax, then it may be more difficult to find free filing for the State, but in the first year of Free Filing, many of these partner companies will offer free State Filing for lower income persons.

Freefile.irs.gov - Spread The Word

For those who make over $58,000.00, and are comfortable with doing a more complex tax return, the taxpayer can use the same page to go to Free File Fillable Forms. There is no State filing on Free File Fillable Forms, but the taxpayer can do Amendments, and prior year taxes. I am not sure how far they go back, but I think quite a way back.

I hope this helps, and if you have not filed your taxes yet; what are you waiting for. There are millions of dollars in Earned Income Credit for qualifying taxpayers; many without children or dependents who are unaware they are eligible.

File On! Happy Returns!