10 Tips for Maximizing your Tax Benefits

At AJMBookkeeping, we want to make sure you are ready this tax season.  Read these tips below to make sure you are utilizing everything possible before you file!

1. Maximize retirement plan contributions

If your employer offers a 401(k) or other type of deferred pension plan, make every effort to contribute the maximum amount allowable -- especially if your employer matches your contribution. Otherwise you are leaving money on the table that could benefit you in your retirement. Think of the employer match as an immediate 100 percent return on your money. Even if there is no match, all of the funds are tax-deferred and grow tax-free.

If your employer does not offer a retirement plan, then consider making a contribution to a traditional individual retirement account or a Roth IRA. The former potentially offers a tax deduction for the year the contribution is made, but both offer tax-deferred gains.

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2. Adjust your withholding

Check your year-to-date withholding and consider changing the taxes withheld if you are expecting a large refund.

This is especially important if you are claiming the earned income tax credit, or EITC, or the additional child tax credit. Why? The IRS is now required by law to hold all refunds on those returns until Feb. 15. The new law was put into place to allow the agency additional time to detect and prevent tax fraud.

IRS Commissioner John Koskinen said in a statement: "It's a personal choice if you want to have extra money withheld to get a bigger tax refund, but you have options available if you prefer to have a smaller refund next year and more take-home money now." You will need to complete Form W-4, Employee's Withholding Allowance Certificate, to adjust the amount of taxes withheld and submit it to your employer.

3. Protect your identity

Speaking of tax fraud, if you received an Identity Protection PIN, or IP PIN, in the past, then you must provide this number on your tax return not only this year but on all future tax returns. An IP PIN is a six-digit number assigned to eligible taxpayers that helps prevent fraudulent returns from being filed under your Social Security number. Remember, the IP PIN is your friend in getting the IRS to accept your tax return. However, this is no ordinary IP PIN, as it changes every year. You read that correctly: every year! If you do not receive the notification in the mail, you will need to go to the IRS website to retrieve it.

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4. Get what's yours

According to the IRS, one out of every five workers fails to claim the very valuable earned income tax credit. If you worked and earned less than $53,505 in 2016 (the limit will be $53,930 in 2017), then use the EITC Assistant tool to determine if you qualify for the credit. You must file a return in order to receive the credit. Don't miss out on this!

5. Declutter and reap a tax break

If one of your New Year's resolutions is to simplify and declutter your life, now is the time to get going. You can make money by donating all of those things you no longer need or want in your life. There are many charitable organizations that accept items other than cash such as clothing, books, electronics and other household items. The deduction is limited to the item's fair market value, and the items must be in good condition or better to be deductible. If the value of the noncash items is more than $500, then you must file Form 8283, Noncash Charitable Contributions, and fill it in with some details. But it is well worth the effort.

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6. Cash in on scholarly tax breaks

If you, your spouse or dependents had higher education costs in 2016, there may be some tax savings for you. In fact there are multiple benefits available. The only difficult part is figuring out which one works best in your situation.

Basically there are three different benefits: the American opportunity credit, the lifetime learning credit and the tuition and fees deduction. There are various requirements that may limit the benefit, but the IRS once again offers a useful tool: the Interactive Tax Assistant tool to help you find your way through the maze. You should receive Form 1098-T, Tuition Statement, from your school with the information required by the IRS to complete Form 8863, Education Credits.

7. Get health coverage in order

Make sure you know what you need to report to the IRS on your health insurance. The shared responsibility provision requires that you and your family have minimum essential coverage or qualify for a health coverage exemption. Otherwise, you must make an individual shared responsibility payment for all months that you didn't have coverage or an exemption.

Most taxpayers just need to do one thing: Check the box that indicates you had health care coverage for all of 2016. If that is not the case or you received advance payments of the premium tax credit on the marketplace, then you may need to fill out Form 8965, Health Coverage Exemptions, and Form 8962, Premium Tax Credit, to complete your tax return. For more information, visit the IRS page on the Affordable Care Act.

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8. Know the rules about foreign accounts

Have a foreign bank account? Was the balance in the account(s) greater than $10,000 total? If the answer is yes to both, then you need to file what's commonly referred to as an "FBAR," a foreign bank account reporting form. The new name is FinCEN Report 114, FinCEN being an acronym for Financial Crimes Enforcement Network. As the name has the word "crime" in it, that should light a fire under your seat to make sure you're in compliance as the penalties are very high for failing to report.

The requirements don't stop there. If you maintain very high balances in your foreign accounts, you'll have to file IRS Form 8938, Statement of Specified Foreign Financial Assets.

Also, if you meet certain thresholds of ownership in any foreign corporations or partnerships, or if you are the beneficiary of a foreign trust, you should be aware of the complex reporting requirements in those instances. Just a few of the pertinent forms are: Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations; Form 3520, Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts, Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund. All are available at the IRS website.

9. Be generous without tax repercussions

Every so many years, the IRS changes the annual exclusion for gifts that you can give without having to file a gift tax return. If you gave more than $14,000 in cash, property or gifts to anyone, you must report the gift on Form 709. If you are married, you can give a combined $28,000 and remain under the radar.

Note that this applies to the person giving the gift; if you are receiving a gift, congratulations -- you don't have to do anything. That is, unless you receive a gift from a non-U.S. person. If you happen to receive such a gift that is greater than $100,000, you will have to report this on the IRS Form 3520.

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10. Be smart when you file

When filing your return, the quickest and easiest way to receive your refund is to electronically file your return and use direct deposit. If you owe money, use IRS direct pay from your checking or savings account. And whatever else you do, please make sure you keep a copy of your filed tax return. Believe me, it saves so much trouble in so many ways in the event you do happen to need it.

All information gathered from Bankrate:

Read more: http://www.bankrate.com/finance/taxes/tax-tips/#ixzz4bVDsZAMr 

If you are an individual seeking a reliable company to file your tax return, please consider AMJ Bookkeeping and give a call to set up your appointment or email us today. 


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Tax Return Identity Theft Steps to take to avoid becoming a victim.

Here are tips to ensure you are not a victim.


Individual Tax Identification Numbers

Processing delays are likely for filers with expired Individual Tax Identification Numbers. (ITIN)

There are two reasons an ITIN would expire December 31, 2016:

  • If you have not used your ITIN on a U.S. tax return at least once for tax years 2013, 2014 or 2015   -OR- 
  • If your ITIN has the middle digits 78 or 79 (9NN-78-NNNN or 9NN-79-NNNN)

What You Need to Do

  • You can renew your ITIN now if it expired and you plan to use it on your 2016 U.S. tax return. 
  • No action is needed by expired ITIN holders who don't need to file a tax return for year 2016. 
  • There are new documentation requirements when applying for or renewing an ITIN for certain dependents. 
  • To avoid delays, ensure accurate W-7 and valid ID documents are submitted. 
  • Find more information at  IRS.gov/ITIN


Expecting a refund? Some refunds must be held until February 15.

According to a new tax law change, the IRS cannot issue refunds before February 15 for tax returns that claim the Earned Income Tax Credit or the Additional Child Tax Credit.

    • This applies to the entire refund, even the portion not associated with these credits.
  • The IRS will begin to release EITC/ACTC refunds starting February 15. However, the IRS cautions taxpayers that these refunds likely won't arrive in bank accounts or on debit cards until the week of February 27


What You Need to Do

  • Be careful not to count on getting a refund by a certain date, especially when making major purchases or paying other financial obligations.
  • You don't need to wait until February 15 to file your tax return. While the IRS must hold the refund until February 15, it will begin taking the steps it normally does to process your tax return once the filing season starts.  
  • File a complete and accurate return and include all known refundable credits with your original return.
  • Check Where's My Refund on IRS.gov or the IRS mobile app, IRS2Go, after February 15 for your personalized refund status.

Adjusted Gross Income

Some taxpayers using a software product for the first time may need to know their 2015 Adjusted Gross Income, or AGI, to e-file their 2016 tax return.

  • When self-preparing your taxes and filing electronically, you must sign and validate your electronic tax return by entering your prior-year AGI or your prior-year Self-Select PIN. Using an electronic filing PIN is no longer an option.

What You Need to Do

  • If you have a copy of your 2015 federal income tax return, your AGI is on line 37 of the Form 1040; line 21 on the Form 1040-A or line 4 on the Form 1040-EZ.x 
  • Learn more about how to verify your identity and electronically sign your tax return at  Validating Your Electronically Filed Tax Return.

Protecting Taxpayers

To better protect taxpayers, the IRS recently upgraded its identity verification process for certain online self-help tools. The purpose is to prevent taxpayer impersonations and account takeovers by identity thieves.

  • All IRS Taxpayer Assistance Centers (TAC) now operate by appointment only. 
  • Many questions can be resolved on the IRS.gov website without visiting a TAC.

What You Need to Do

  • Start with IRS.gov for help including tools, filing options and other services and resources. 
  • If you believe your tax issue cannot be handled online or by phone, always check IRS.gov for days and hours of service as well as services offered at the IRS TAC location you plan to visit. For most services you must call to make an appointment.

(All information listed above was gathered from the IRS.gov website.)

For all AMJ Bookkeeping existing tax clients, we will ensure your return is as safe as we can make it.  We will take all necessary steps to expedite the return safely and effectively. 

If you are an individual seeking a reliable company to file your tax return, please consider AMJ Bookkeeping and give a call to set up your appointment or email us today. 


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Bookkeeping and Accuracy

The two go hand-in-hand, so you need to hire AMJ Bookkeeping to keep your books.

Sometimes, business owners feel hiring someone to manage their books is an unnecessary cost, or some may be uncomfortable giving a third party access to this privileged information. While these concerns are valid, there are many advantages to hiring AMJ Bookkeeping to take bookkeeping off your hands that surely outweigh any minor drawbacks.

It's Tax Time Again

To ensure ease for taxes, before you come to my office, you'll need to do some preparation beforehand. The following is a list of the five major areas you'll need to consider when gathering W2s, receipts and invoices to bring with you to your appointment at my office.

#1 -- Identification

Driver's License, passport, military I.D. -- any of those should work just fine.

#2 -- Proof of Income

Earned income (salary and wages from a job) and unearned income (Social Security and retirement benefits, alimony, interest and dividends, etc.).  If you're not sure, ask me -- I'll let you know.

#3 -- Proof of Expenses

This is why I tell you to keep your receipts. The biggest deductions often come in the form of business expenses and we will need to prove those with receipts.

#4 -- Proof of Disaster, Theft and other Unexpected Losses

There are several provisions in the tax code designed to help out folks who are victims of unexpected and expensive losses of property or cash.

#5 -- Payment Method

If you belong to the lucky 23 percent of taxpayers who owe money to the IRS on April 15, then you should come prepared to make a payment. 

These 5 steps should help you when our appointment date comes around.  (Thanking you in advance for your organization and neat and tidy documents.)

Stash Money In An IRA

You can contribute up to $5,500 ($6,500 if you are 50 or older by the end of the year). Depending on your income and whether you participate in a retirement savings plan at work, you may be able to deduct some or all of your IRA contribution. Or, you can choose to forgo the upfront tax break and contribute to a Roth IRA that will allow you to take tax-free withdrawals in retirement.

Give Gifts ONLY On Your List To Save Your Budget

After announcing to friends and family that you will NOT be buying any more expensive gifts, you are now free to create your list of gifts to give away.  If it includes more than five people outside of your immediate family, cut down on the number of people on your present list. Then, bake some cookies, knit scarves or fold paper and give to all the people you snipped from your original gift list. Home-made is heart-filled!


3 Things To Consider To Help Cut Your Taxes

October is the perfect time to start your tax planning so you can take advantage of all the opportunities to minimize your tax bill or maximize your refund. A few options to consider are:

1. Have you maxed out retirement plan contributions?

2. Have you set aside money for 529 college savings plans or health savings accounts?

3. Have you considered which charitable donations you want to make before year's end?

These are just a few considerations, so consult AMJ Bookkeeping for the complete list -- you'll be glad you did.