IRS Can Help When Starting a Small Business

If you are opening a new business this summer, the IRS has some basic federal tax information to help you get started.

Here are some things to consider when starting a business:

• Type of Business One of the first decisions you need to make is what type of business you are going to establish. The most common types of businesses are sole proprietorship, partnership, corporation, S corporation, and Limited Liability Company. The type of business you establish determines which tax forms you will need to file.
• Types of Taxes The type of business you operate also determines what types of taxes you will pay and how you will pay them. The four general types of business taxes are income tax, self-employment tax, employment tax and excise tax.
• Employer Identification Number A business typically needs to get an Employer Identification Number to use as an identifier for tax purposes. Check IRS.gov to find out whether you will need this number, and, if so, you can apply for an EIN online.
• Recordkeeping Good records will help you keep track of deductible expenses, prepare your tax returns and support items that you report on your tax returns. Good records will also help you monitor the progress of your business and prepare your financial statements. You may choose any recordkeeping system that clearly shows your income and expenses.
• Tax Year  Every business taxpayer must figure taxable income on an annual basis called a tax year. Your tax year can be either a calendar year or a fiscal year.
• Accounting Method  Each taxpayer must also use a consistent accounting method, which is a set of rules for determining when to report income and expenses. The most commonly used accounting methods are the cash method and accrual method. Under the cash method, you generally report income in the tax year you receive it and deduct expenses in the tax year you pay them. Under an accrual method, you generally report income in the tax year you earn it and deduct expenses in the tax year you incur them.

Visit the IRS.gov website and click on the ‘Businesses’ tab for more information and resources, including a special section on starting a business. Publication 583, Starting a Business and Keeping Records, can also help new business owners understand their federal tax responsibilities. The publication is also available on IRS.gov or by calling 800-TAX-FORM (800-829-3676). 

Links:

• Starting a Business
• Publication 583, Starting a Business and Keeping Records (PDF)
• Business Taxes
• Employer ID Numbers (EINs)
• Publication 334, Tax Guide for Small Business (PDF)
• Publication 535, Business Expenses (PDF)
• Publication 538, Accounting Periods and Methods (PDF)

YouTube: Selling a Home IRS advice

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Find out what you need to know tax-wise when a home is sold in this new YouTube video.

Watch this and other videos on the IRS YouTube Channel.

IRS Summertime Tax Tip 2012-08

Renting Your Vacation Home

Income that you receive for the rental of your vacation home must generally be reported on your federal income tax return.

However, if you rent the property for only a short time each year, you may not be required to report the rental income.

The IRS offers these tips on reporting rental income from a vacation home such as a house, apartment, condominium, mobile home or boat:

•Rental Income and Expenses  Rental income, as well as certain rental expenses that can be deducted, are normally reported on Schedule E, Supplemental Income and Loss.

•Limitation on Vacation Home Rentals  When you use a vacation home as your residence and also rent it to others, you must divide the expenses between rental use and personal use, and you may not deduct the rental portion of the expenses in excess of the rental income.

You are considered to use the property as a residence if your personal use is more than 14 days, or more than 10% of the total days it is rented to others if that figure is greater. For example, if you live in your vacation home for 17 days and rent it 160 days during the year, the property is considered used as a residence and your deductible rental expenses would be limited to the amount of rental income.

•Special Rule for Limited Rental Use  If you use a vacation home as a residence and rent it for fewer than 15 days per year, you do not have to report any of the rental income. Schedule A, Itemized Deductions, may be used to report regularly deductible personal expenses, such as qualified mortgage interest, property taxes, and casualty losses.

IRS Publication 527, Residential Rental Property (Including Rental of Vacation Homes), is available at IRS.gov or by calling 800-TAX-FORM (800-829-3676). The booklet offers more information about rental property, including special rules about personal use and how to report rental income and expenses.

Common Tax Questions Answered by the IRS

Click here to go to IRS.GOV "Frequently Asked Tax Questions and Answers"


For Example:

Is there an age limit on claiming my child as a dependent?
http://www.irs.gov/faqs/faq/0,,id=199707,00.html

Individual 1040 Tax Extensions due October 15th, 2012.

Special Tax Benefits for Armed Forces Personnel - IRS

Military personnel and their families face unique life challenges with their duties, expenses and transitions. The IRS wants active members of the U.S. Armed Forces to be aware of all the special tax benefits that are available to them.

Here are 10 of those special tax benefits:

1. Moving Expenses If you are a member of the Armed Forces on active duty and you move because of a permanent change of station, you may be able to deduct some of your unreimbursed moving expenses.

2. Combat Pay If you serve in a combat zone as an enlisted person or as a warrant officer for any part of a month, all your military pay received for military service during that month is not taxable. For officers, the monthly exclusion is capped at the highest enlisted pay, plus any hostile fire or imminent danger pay received. You can also elect to include your nontaxable combat pay in your "earned income" for purposes of claiming the Earned Income Tax Credit.

3. Extension of Deadlines The deadline for filing tax returns, paying taxes, filing claims for refund, and taking other actions with the IRS is automatically extended for qualifying members of the military.

4. Uniform Cost and Upkeep If military regulations prohibit you from wearing certain uniforms when off duty, you can deduct the cost and upkeep of those uniforms, but you must reduce your expenses by any allowance or reimbursement you receive. 

5. Joint Returns Generally, joint income tax returns must be signed by both spouses. However, when one spouse is unavailable due to military duty, a power of attorney may be used to file a joint return.

6. Travel to Reserve Duty If you are a member of the US Armed Forces Reserves, you can deduct unreimbursed travel expenses for traveling more than 100 miles away from home to perform your reserve duties.

7. ROTC Students Subsistence allowances paid to ROTC students participating in advanced training are not taxable. However, active duty pay – such as pay received during summer advanced camp – is taxable.

8. Transitioning Back to Civilian Life You may be able to deduct some costs you incur while looking for a new job. Expenses may include travel, resume preparation fees, and outplacement agency fees. Moving expenses may be deductible if your move is closely related to the start of work at a new job location, and you meet certain tests.

9. Tax Help Most military installations offer free tax filing and preparation assistance during and/or after the tax filing season.

10. Tax Information IRS Publication 3, Armed Forces’ Tax Guide, is an excellent resource as it summarizes many important military-related tax topics. Publication 3 can be downloaded from IRS.gov or may be ordered by calling 1-800-TAX-FORM (800-829-3676).

QuickBooks Point of Sale V10 Certification

Dear MAX WOODBURY III,

Congratulations on your completion of QuickBooks Point of Sale V10 Certification with a score of93. 

QuickBooks POS Certification provides you with training and marketing tools to distinguish yourself, expand your business, and offer a higher level of QuickBooks POS expertise to retail businesses. To learn more about these benefits, please visithttps://proadvisor.intuit.com/content/certification/point_of_sale.jhtml

Please note: If your profile is not currently on the QuickBooks Find-a-ProAdvisor Website, login into the ProAdvisor Member Website, click on "Update My Profile" on the left navigation bar, and select "Publish Profile on the Web" You also must have successfully passed the QuickBooks Certification course for version 2010 or higher, to be recognized as a Certified QuickBooks Enterprise Solutions ProAdvisor on the www.findaproadvisor.com Website.

Thank you for being a member of the QuickBooks ProAdvisor Program, and for your commitment to and support of QuickBooks products.

Sincerely,

The QuickBooks ProAdvisor Team

Form 1040X

IRS Offers Tips on How to Fix Errors Made on Your Tax Return

If you discover an error after you file your tax return, you can correct it by amending your return. Here are 10 tips from the Internal Revenue Service about amending your federal tax return:

1. When to amend a return Generally, you should file an amended return if your filing status, number of dependents, total income, tax deductions or tax credits were reported incorrectly or omitted.  Additional reasons for amending a return are listed in the instructions.

2. When NOT to amend a return In some cases, you do not need to amend your tax return.  The IRS usually corrects math errors or requests missing forms – such as Forms W-2 or schedules – when processing an original return.  In these instances, do not amend your return.

3. Form to use Use Form 1040X, Amended U.S. Individual Income Tax Return, to amend a previously filed Form 1040, 1040A, 1040EZ, 1040NR or 1040NR-EZ.  Make sure you check the box for the year of the return you are amending on the Form 1040X.  An amended tax return cannot be filed electronically.

4. Multiple amended returns If you are amending more than one year’s tax return, prepare a separate 1040X for each return and mail them in separate envelopes to the appropriate IRS processing center (see "Where to File" in the instructions for Form 1040X).

5. Form 1040X The Form 1040X has three columns. Column A shows original figures from the original return. Column B shown the changes you are making.   Column C shows the corrected figures. There is an area on the back of the form to explain the specific changes and the reasons for the changes.

6. Other forms or schedules If the changes involve other schedules or forms, attach them to the Form 1040X.  Failure to do this will cause a delay in processing.

7. Additional refund If you are amending your return to get an additional refund, wait until you have received your original refund before filing Form 1040X.  You may cash that check while waiting for any additional refund.

8. Additional tax If you owe additional tax, you should file Form 1040X and pay the tax as soon as possible to limit interest and penalty charges.

9. When to file Generally, to claim a refund, you must file Form 1040X within three years from the date you filed your original tax return or within two years from the date you paid the tax, whichever is later.

10. Processing time Normal processing time for amended returns is 8 to 12 weeks.

Links:

• Form 1040X, Amended Federal Income Tax Return (PDF 117K)
• Instructions for Form 1040X (PDF 45K)

AICPA Insights

Going on Vacation? Your Social Media Activity Doesn’t Have To Posted: 10 Jul 2012 11:31 AM PDT Keep your social media channels afloat; schedule content while you are away from the office. You’ve set your out-of-office message, changed your voicemail greeting and, in your mind, you may already be on the beach listening to waves crash against the sand. Back to reality…there’s one more thing to take care of before you go! Continuing your activity will help you stay engaged with those fans and followers while you are away.   Scheduling posts on Facebook Manage your firm’s Facebook page? You can now schedule posts to go out at a specific time in the future directly from Facebook. This allows you to set up content to go out to your fans at any day and time. Here’s how: Type your post in the status box Click the icon in the lower left corner that looks like a clock. This allows you to select the day and time you want your post to publish. Click the Schedule button     Third Party Tools Help Manage Multiple Accounts A host of free tools will help you schedule content to go out on Facebook, Twitter, LinkedIn and more.  I personally have used Hootsuite and TweetDeck, both of which are fairly simple to set up and manage.  And of course, you can download the mobile app for all of your favorite social networks to stay up to date while poolside! No need to wait for vacation I know what you are thinking: “Sounds easy enough. Why couldn’t I schedule content all the time?” You can! This is a great way to streamline your social activity all year long. For example, take 15 minutes on Monday mornings to schedule your content to publish throughout the week. This ensures you have a steady stream of information going out to your fans and followers, even on hectic days when you may not have time to visit your social networks. Stacie Saunders, Strategist, Social Media and Member Engagement, American Institute of CPAs. The Word Like on the Beach image via Shutterstock

Job Search Expenses Can be Tax Deductible

Summertime is the season that often leads to major life decisions, such as buying a home, moving or a job change. If you are looking for a new job that is in the same line of work, you may be able to deduct some of your job hunting expenses on your federal income tax return.

Here are seven things the IRS wants you to know about deducting costs related to your job search:

1. To qualify for a deduction, your expenses must be spent on a job search in your current occupation. You may not deduct expenses you incur while looking for a job in a new occupation.

2. You can deduct employment and outplacement agency fees you pay while looking for a job in your present occupation. If your employer pays you back in a later year for employment agency fees, you must include the amount you received in your gross income, up to the amount of your tax benefit in the earlier year.

3. You can deduct amounts you spend for preparing and mailing copies of your résumé to prospective employers as long as you are looking for a new job in your present occupation.

4. If you travel to look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area to which you travelled. You can only deduct the travel expenses if the trip is primarily to look for a new job. The amount of time you spend on personal activity unrelated to your job search compared to the amount of time you spend looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job.

5. You cannot deduct your job search expenses if there was a substantial break between the end of your last job and the time you begin looking for a new one.

6. You cannot deduct job search expenses if you are looking for a job for the first time.

7. The amount of job search expenses that you can claim is limited. To determine your deduction, use Schedule A, Itemized Deductions. Job search expenses are claimed as a miscellaneous itemized deduction and the total of all miscellaneous deductions must be more than two percent of your adjusted gross income.

For more information about job search expenses, see IRS Publication 529, Miscellaneous Deductions. This publication is available on www.irs.gov or by calling 800-TAX-FORM (800-829-3676).

Links:

• Schedule A, Itemized Deductions (PDF)
• Publication 529, Miscellaneous Deductions (PDF)

Do you have an Emplyee or an Independent Contractor?

Withholding of Income Tax on Wages.  Withholding of income tax by and employer is required on each of an employee’s wage payments.  Generally, the term “wages” includes all remuneration (other than fees paid to a public official) for services performed by an employee for an employer, including the cash value of all remuneration (including benefits) paid in any medium other than cash.  Salaries, fees, bonuses, commissions on sales or on insurance premiums, taxable fringe benefits, pensions, and retirement pay (unless taxed as an annuity) are, if paid as compensation for services, subject to withholding.

The term “employer” includes not only individuals and organizations engaged in trade or business, but also organizations exempt from income, Social Security, and unemployment taxes.  Withholding also applies to wages and salaries of employees, corporate officers, and elected officials of federal, state, and local government units.

The term “employee” must be distinguished from and “independent contractor” for purposes of employment tax obligations.  An employer does not generally have to withhold taxes on payments to independent contractors.  In addition to the common law definition that focuses on the control that is exercised over what work is done and how it is done, the IRS has identified a 20 – factor test to assist in making this determination.  The factors are:

1.     Employee compliance with instructions required,

2.    Training,

3.       Integration of worker’s services into the business,

4.       Services are rendered personally,

5.       Ability to hire, supervise and pay assistants,

6.       A continuing relationship,

7.       Set hours of work are established,

8.       Full time is required,

9.       Work performed on business’s premises,

10.   Services performed in a set order or sequence,

11.   Oral or written reports required,

12.   Payment by hour, week or month,

13.   Payment of business and/or travel expenses,

14.   Tools and materials furnished,

15.   Worker invest in facilities,

16.   Worker can realize a profit or loss,

17.   Worker performs services for more than one business at a time,

18.   Worker makes services available to the general public,

19.   Business has the right to discharge worker, and

20.   Worker has the right to terminate the relationship.

Either an employer or employee, with or without the other’s knowledge or assent, may request that the IRS to make a determination as to whether or not a particular worker is an employee.  The request is made using Form SS-8.

To find a QuickBooks ProAdvisor near you....

http://proadvisor.intuit.com/acm/alpha/search-criteria-v2.html?_requestid=125914

Dear MAX WOODBURY III,

Congratulations on your completion of QuickBooks Enterprise Solutions v11 Certification Course with a score of 100. 

QuickBooks Enterprise Solutions Certification can help you distinguish yourself, expand your business, and offer a higher level of QuickBooks expertise and consulting to your clients. To learn more about these benefits, please visithttps://proadvisor.intuit.com/content/certification/enterprise_solutions.jhtml

Please note: If your profile is not currently on the QuickBooks Find-a-ProAdvisor Website, login into the ProAdvisor Member Website, click on "Update My Profile" on the left navigation bar, and select "Publish Profile on the Web"You also must have successfully passed the QuickBooks Certification course for version 2010 or higher, to be recognized as a Certified QuickBooks Enterprise Solutions ProAdvisor on the www.findaproadvisor.com Website.

Thank you for being a member of the QuickBooks ProAdvisor Program, and for your commitment to and support of QuickBooks products.

Sincerely,

The QuickBooks ProAdvisor Team

Dear MAX WOODBURY III,

Congratulations on your completion of QuickBooks 2012 ProAdvisor Certification Exam with a score of 92.Please visithttps://proadvisor.intuit.com/content/certification/quickbooks.jhtml to learn about all the benefits of QuickBooks Certification.

Please note: If your profile is not currently on the QuickBooks Find-a-ProAdvisor Website, login into the ProAdvisor Member Website, click on "My Account" and on the next page click on 'Find-a-ProAdvisor Listing' on the left navigation bar, and "Publish Profile on the Web"

Thank you for being a member of the QuickBooks ProAdvisor Program, and for your commitment to and support of QuickBooks products.

Sincerely,

The QuickBooks ProAdvisor Team

QuickBooks 2012 Proadvisor Certification Exam

Max Woodbury III renewed his certification today enduring a 8 hour long course with a 2 hour long test at the end.  Congratulations!

New Programs Included in QuickBooks 2012 Edition

http://proadvisor.intuit.com/product/whatsnew/

Free Webinar- Social Security

Free Webinar for Federal, State and Local Governments

The IRS office of Federal, State, and Local Governments (FSLG) invites you to register for a Free Webinar on Wednesday, August 8, at 2:00 p.m. Eastern Time.

Topic: Social Security Section 218 Agreements and Government Entity Restructuring

Co-Hosted by: The Social Security Administration (SSA) and the National Conference of State Social Security Administrators (NCSSSA)

Section 218 agreements are voluntary arrangements between governmental entities and the Social Security Administration to provide social security and Medicare coverage for groups of employees, either in addition to, or in place of, coverage by a public retirement system. In order to properly determine the coverage of social security and Medicare for governmental employees, it is essential that governmental employers have an understanding of their state's Section 218 agreement.

 Learn about:

 

• What happens to the Social Security coverage of employees when two or more governmental entities combine?
• What is a predecessor/successor situation?
• What types of predecessor/successor situations are there?
• How are predecessor/successor situations identified?
• How are predecessor/successor situations handled?

 

How to Register: For more information, and to register on-line,click here to register. You will receive a confirmation e-mail with a link to place it on your calendar.

 Earn Continuing Education credit

 

• Enrolled agents receive one CE credit for participating for a minimum of 50 minutes from the start of the webinar.
• Other tax professionals may receive credit if the webinar meets your organization’s or state’s continuing professional education requirements.
• To receive credit, you must attend the presentation on August 8th. Register for the webinar using your e-mail address, and use the same e-mail address to log in to attend. This will confirm your attendance and generate your Certificate of Completion.
• *Only August 8, 2012 participants will receive certificates. If you do not need a certificate to obtain credit, you may choose to view the archived version of the webinar.
• Look for your Certificate of Completion by e-mail approximately one week after the webinar. If you have met all requirements, you will receive your certificate automatically.

 

Makes Tax Time Easier

with Reliable & Complete Records

QuickBooks organizes your financial records throughout the year, so finding
the information you need for tax time is easy. Your tax accountant, if you
have one, may also spend less time completing your paperwork.

Tax Report

Your Accountant

With QuickBooks, you have options to simplify tax time. 
Export tax reports, or allow your accountant access to your finances in QuickBooks.

Quickbooks Proadvisors are going to Disney World

"Scaling New Heights 2013"  Conference for QuickBooks ProAdvisors Join Intuit and your fellow ProAdvisors at Disney World! June 23-26, 2013

Save the Date!   Disney's Contemporary Resort Master Intuit products Master selected QuickBooks add-on products Expand the consulting services you offer  your clients Prepare for Intuit Certification Exams Grow your practice...and More! www.scalingnewheights.com Play Video

Conducted in Cooperation with

When:
June 23-26, 2013

Where:
Disney's Contemporary
Resort

Play Video

Same Great Training... Twice the Fun!

Registration Opens October 2012!

Sales Tax Automation for QuickBooks users

Whether you're an experienced accounting manager, or are new to the world of sales tax, you'll want to join us for this engaging and informative one hour webinar.  Sales and use tax compliance is difficult to manage,especially if your process is manual. Determining which items are taxable in which states and maintaining rate tables within QuickBooks is time-consuming and not 100% accurate.     Join us to learn:  How to protect your business from audits.  How to save time and money on tax administration. Why zip codes mean zip when it comes to sales tax.  Join our webcast on July 17 and learn how to automate your sales tax policy in QuickBooks. Space fills up quickly, so register today!

Date/Time:   Tuesday, July 17 9:00 AM PST / 12:00 PM EST Presenter: Ian Clyde QuickBooks Sales Tax Expert Cost: Complimentary Avalara is proud to be the only sales tax service provider that is a "Gold Certified Developer" with Intuit.

A Lesson from the IRS for Students Starting a Summer Job

School’s out, but the IRS has another lesson for students who will be starting summer jobs. Summer jobs represent an opportunity for students to learn about the tax system.

Not all of the money they earn will be included in their paychecks because their employer must withhold taxes.

Here are six things the IRS wants students to be aware of when they start a summer job.

1. When you first start a new job you must fill out a Form W-4, Employee’s Withholding Allowance Certificate. This form is used by employers to determine the amount of tax that will be withheld from your paycheck. If you have multiple summer jobs, make sure all your employers are withholding an adequate amount of taxes to cover your total income tax liability.

2. Whether you are working as a waiter or a camp counselor, you may receive tips as part of your summer income. All tips you receive are taxable income and are therefore subject to federal income tax.

3. Many students do odd jobs over the summer to make extra cash. Earnings you receive from self-employment – including jobs like baby-sitting and lawn mowing – are subject to income tax.

4. Even if you do not earn enough money to owe income tax, you will probably have to pay employment taxes. Your employer will withhold these taxes from your paycheck. If you earn $400 or more from self-employment, you will have to pay self-employment tax. This pays for benefits under the Social Security system that are available for self-employed individuals the same as they are for employees that have taxes withheld from their wages. The self-employment tax is figured on Form 1040, Schedule SE, Self-Employment Tax.

5. Food and lodging allowances paid to ROTC students in advanced training are not taxable. However, active duty pay – such as pay received during summer camp – is taxable.

6. Special rules apply to services you perform as a newspaper carrier or distributor. You are treated as self-employed for federal tax purposes regardless of your age if you meet the following conditions:

• You are in the business of delivering newspapers.
• All your pay for these services directly relates to sales rather than to the number of hours worked.
• You perform the delivery services under a written contract which states that you will not be treated as an employee for federal tax purposes.
  If you do not meet these conditions and you are under age 18, then you are generally exempt from Social Security and Medicare tax.

More information about income tax withholding and employment taxes can be found at IRS.gov, the official IRS website.
 

Links:

• Form W-4, Employee's Withholding Allowance Certificate (PDF)
• Form 1040, Schedule SE, Self-Employment Tax (PDF)

Quickbooks Graphs

This is a section in Quickbooks.  Very useful tool for every business!  Great comparison charts...

IRS Summertime Tax Tip 2012-02

The IRS has expanded its “Fresh Start” initiative by offering more flexible terms to its Offer-in-Compromise Program. These newest rules enable some financially distressed taxpayers to clear up their tax problems even quicker.

An offer-in-compromise (OIC) is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. An OIC is generally not accepted if the IRS believes the liability can be paid in full as a lump sum or through a payment agreement. The IRS looks at the taxpayer’s income and assets to determine the reasonable collection potential.

This expansion of the “Fresh Start” initiative focuses on the financial analysis used to determine which taxpayers qualify for an OIC.

Here are the OIC changes:

• Revising the calculation for a taxpayer’s future income The IRS will now look at only one year (instead of four years) of future income for offers paid in five or fewer months; and two years (instead of five years) of future income for offers paid in six to 24 months. All OICs must be paid in full within 24 months of the date the offer is accepted.
• Allowing taxpayers to repay their student loans Minimum payments on student loans guaranteed by the federal government will be allowed for the taxpayer’s post-high school education. Proof of payment must be provided.
• Allowing taxpayers to pay state and local delinquent taxes When a taxpayer owes delinquent federal and state or local taxes, and does not have the ability to fully pay the liabilities, monthly payments to state taxing authorities may be allowed in certain circumstances.
• Expanding the Allowable Living Expense allowance Standard allowances incorporate average expenses for basic necessities for citizens in similar geographic areas. These standards are used when evaluating installment agreement and offer-in-compromise requests. The National Standard miscellaneous allowance has been expanded. Taxpayers can use the allowance to cover expenses such as credit card payments and bank fees and charges.

More information on the “Fresh Start” initiative can be found at IRS.gov.

Form 656-B, Offer in Compromise Booklet, and Form 656, Offer in Compromise, can be found at IRS.gov or ordered by calling 1-800-TAX-FORM (800-829-3676).

July 25 Webinar: Churches and Religious Organizations

This free webinar explains federal tax rules of interest to churches and religious organizations. Watch this webinar to learn:

• When it comes to taxes, what is a "church?"
• What is a "religious organization?"
• How do you apply for tax exempt status?
• How to stay exempt: Do's and don'ts
• Special rules for compensation of ministers
• Recordkeeping and filing
• Rules limiting an IRS audit of a church

Keep the Child and Dependent Care Tax Credit in Mind for Summer Planning

During the summer many parents may be planning the time between school years for their children while they work or look for work. The IRS wants to remind taxpayers that are considering their summer agenda to keep in mind a tax credit that can help them offset some day camp expenses.

The Child and Dependent Care Tax Credit is available for expenses incurred during the summer and throughout the rest of the year. Here are six facts the IRS wants taxpayers to know about the credit:

1. Children must be under age 13 in order to qualify.

2. Taxpayers may qualify for the credit, whether the childcare provider is a sitter at home or a daycare facility outside the home.

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

4. The credit can be up to 35 percent of qualifying expenses, depending on income.

5. Expenses for overnight camps or summer school/tutoring do not qualify.

6. Save receipts and paperwork as a reminder when filing your 2012 tax return. Remember to note the Employee Identification Number (EIN) of the camp as well as its location and the dates attended.

For more information check out IRS Publication 503, Child and Dependent Care Expenses. This publication is available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Links:

IRS Publication 503, Child and Dependent Care Expenses

YouTube Videos:

Summer Day Camp Expenses - English|Spanish|ASL