ACCOUNTING & TAX Source Inc.

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Tips & News

TIPS

  • Check your refund status, figure how much to have deducted from your W4, and many other government related tax issues by checking the IRS link listed on our website or go to www.irs.gov
  • Build tax minimizing strategies:  purchase a home, purchase investment properties, create small businesses, open self-controlled retirement accounts, etc.
  • Business Owners - keep records of all income/expense documents. 
  • Maximize Refund money


South Carolina Tax Credits

Subsistence Allowance

Police and all commissioned law enforcement officers paid by South Carolina municipal, county, state governments or the federal government, full-time fire fighters, and full-time emergency medical service personnel are entitled to subsistence allowances of $8.00 per regular workday. Your employer should provide you with the number of work days.


Retirement Deduction

An individual who is under age 65 may claim a retirement deduction up to $3,000 of qualified retirement income from his or her own plan. An individual who is age 65 or older during the tax year may claim a retirement deduction up to $10,000 of qualified retirement income from his or her own plan.


Qualified Retirement Income is income from plans defined in I.R.C. 401, 403, 408 and 457, and all public employee retirement plans of the federal, state and local governments, including individual retirement plans, Keogh plans, and military retirement.


Note: Social Security income, railroad retirement income, and disability retirement income due to permanent and total disability do NOT qualify because these items are not taxed by South Carolina.


Certain Nontaxable National Guard or Reserve Pay

Income received from National Guard or Reserve members for customary annual training, weekend drills and other inactive duty training is generally exempt from South Carolina income tax.

Members of the National Guard or Reserves may:


    • Deduct all inactive duty pay from the United States or any state for weekend drills and other inactive duty training actually attended.
    • Deduct up to 15 days of customary annual training pay, also referred to as "active duty training" or "ADT".
    • Inactive duty Reserve members may also deduct up to 14 days of customary annual training pay, also referred to as "active duty training" or "ADT" plus up to 2 days of travel time listed on official orders.
    • Full time Active Guard and Reserve (AGR) employees may deduct up to 15 days of annual training actually attended and up to 24 days of weekend drills (a maximum of 39 days) at the daily rate of pay.


Total and Permanent Disability Retirement Income

If disability retirement income was taxed on your federal income tax return and you are totally and permanently disabled, you may be able to deduct this income from your South Carolina taxable income.


You must be totally and permanently disabled, unable to be gainfully employed in any capacity, receiving income from a disability retirement plan, and eligible for the homestead exemption under Section 12-37-250 to qualify. You do not qualify if you are receiving disability income from one job while able to perform another job. You must attach a copy of the physician's statement establishing that you are permanently and totally disabled.


    • Illinois - k-12 school age dependents state tuition credit.
    • Funeral expenses are only deductible when paid from an Estate.
    • Bankruptcy fees/expenses are normally not deductible (exceptions apply).



Strategies:


DO: Pay off credit card or installment debt and free up monthly income to start a rainy day fund

  • Pay off small credit card or installment debt balances first to free up disposable income to pay larger balances (this is the way to begin financial freedom)
  • Save an emergency fund ( 3-6 months income)
  • Pay off all Installment debt
  • Open a retirement account
  • Purchase a home or investment property or pay off home
  • Educational fund for your children
  • Start a Business (Profit or Non-profit)
  • Invest in stock market (become a knowledgeable investor first)


DON'T:  Spend $$$$ on things that don't/won't bring you a return


MAKE YOUR MONEY WORK FOR YOU!

 
NEWS

2017 Tax Season begins Monday, 1/23/2017.  We will begin accepting returns on Monday, 1/9/2017.

The IRS reminds taxpayers that a new law requires the IRS to hold refunds claiming the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) until Feb. 15.  This applies to the entire refund, even the portion not associated with these credits.
 In addition, the IRS wants taxpayers to be aware it will take several days for these refunds to be released and processed through financial institutions. Factoring in weekends and the President’s Day holiday, the IRS cautions that many affected taxpayers may not have actual access to their refunds until the week of Feb. 27.


Refund Changes:

Banks no longer offer same day refunds, or NEXT DAY REFUNDS


2016 Refundable Credits

Refundable credits this year include:  EIC, American Opportunity Credit (up to $1,000 for 1st 4 years of college), Premium Health Insurance Tax Credit and additional child tax credit.


Earned Income Credit:

Taxpayers can receive EIC for up to three (3) dependents. You can receive up to:


    • $6,269 - 3 qualifying dependents
    • $5,572 - 2 qualifying dependents
    • $3,373 - 1 qualifying dependent
    • $ 506 - no qualifying dependent

Education Credit:

New American Opportunity Credit (AOC). You may be able to receive up to $1,000 refundable credit during the 1st four years of college.


Homebuyer Credit/ Payback:

Taxpayers who purchased a home in 2008 and received $7,500 credit must pay back $500

each year on Tax return until paid in full.


Residential Energy Credits:

Taxpayers can receive a credit up to 30% for the cost of certain energy-efficient property or improvements you placed in service in 2013. Heat pumps, air conditioners, water heaters,

windows, doors, insulation materials and certain roofs.







BUDGETING


More Month Than Money?
Here are some sacrificial, disciplinary steps you can employ today to get more out of your money each month:

    1. First, you MUST set up a BUDGET (an excel spreadsheet will suffice) 
    2. I know it is tedious but, keep a receipt or write down every penny you spend for 1 month
    3. Do a comparison at month's end of what you budgeted versus what you actually spent in step 2
    4. Create an emergency fund (start with $1,000 and build at least 6 months - 1 year)
    5. Maximize retirement investments
    6. Fund college funds (if necessary)
    7. Pay off the home mortgage
    8. Build wealth